Windstream will continue to deleverage balance sheet, CEO says

By Lisa Kerner

Charlotte, N.C., Jan. 8 - Windstream Corp. is focused on integration investment and deleveraging, president and chief executive officer Jeff Gardner said during a presentation at the Citi 2013 Internet, Media and Technology Conference in Las Vegas on Tuesday.

"I think we took another very positive step forward with respect to our balance sheet today," Gardner said about Windstream's announcement that it will raise $700 million in unsecured debt and $300 million in the term B loan market.

While Gardner declined to talk about financing specifics, he said Windstream will be paying off some expensive debt with hopefully some interest expense improvement.

Also on Tuesday, Windstream announced an issue of $700 million of senior notes that will mature in 2023. Windstream said it expects to use the proceeds to complete a tender offer and consent solicitation to purchase for cash any and all of the outstanding $650 million of 8 7/8% senior secured notes due 2017 issued by its wholly owned subsidiary Paetec Holding Corp.

"We took steps last year to make fully available to us in 2013 our undrawn revolving credit facility, which is at $1.25 billion," Gardner said.

The facility can be used to repay $800 million of senior notes that mature later this year.

Leverage reduction

Currently, Windstream's leverage is at 3.7 times. The goal is leverage of between 3.2 times and 3.4 times, said Gardner. While the goal has been delayed due to acquisitions, integration and a change to the company's financials, the extension of the bonus depreciation is expected to benefit Windstream in 2013.

"It is going to allow us to significantly reduce our capital," said Gardner.

Windstream's prior guidance put taxes at $250 million for 2013, and that figure was reduced to between $40 million and $50 million, or "essentially a $200 million improvement in free cash flow," according to Gardner.

"We are not going to go out and spend $200 million next year. We are going to focus it on the balance sheet," he said.

Dividends continue

Gardner touched on Windstream's sustainable cash flows over time and said the company is "in a great position to support the dividend for years to come."

"We think it's still the right model to return a dollar dividend to our investors each year, and we can still grow the business model modestly in that environment and take care of the balance sheet," Gardner said when asked about returning value to shareholders.

Windstream is a Little Rock, Ark.-based provider of advanced network communications, including cloud computing and managed services, to businesses.

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