Windstream to refinance $436 million in EarthLink debt with merger

By Sara Rosenberg

New York, Nov. 7 – Windstream Holdings Inc. intends to refinance EarthLink Holdings Corp.’s gross debt of about $436 million in connection with the all-stock merger of the two companies, according to a news release.

Under the agreement, EarthLink shareholders will receive 0.818 shares of Windstream common stock for each EarthLink share owned. Windstream expects to issue about 93 million shares of stock valued at roughly $673 million, based on the company’s closing stock price on Nov. 4.

The transaction is valued at about $1.1 billion, including debt.

At closing, Windstream shareholders will own about 51% and EarthLink shareholders will own around 49% of the combined company.

Including run-rate synergies, on a pro forma basis for the 12 months ended Sept. 30, the combined company would have a net leverage ratio of 3.2 times.

Closing is expected in the first half of 2017, subject to customary conditions, including approval by the Federal Communications Commission, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, applicable state-level regulatory approvals and approval by Windstream and EarthLink shareholders.

J.P. Morgan and Barclays are acting as financial advisers to Windstream on the transaction, and Foros and Goldman Sachs & Co. are acting as financial advisers to EarthLink.

Windstream is a Little Rock, Ark.-based provider of advanced network communications and technology solutions. EarthLink is an Atlanta-based network services provider.

The combined company, which will retain the Windstream name and will be headquartered in Little Rock, Ark.

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