Windstream issues $553.7 million 6 3/8% notes, $200 million secured notes in exchange so far

By Susanna Moon

Chicago, Nov. 7 – Windstream Holdings, Inc. said it issued $553.7 million principal amount of new 6 3/8% notes and about $200 million principal amount of new secured notes in exchange for four series of notes tendered by the early deadline of 5 p.m. ET on Oct. 31.

Windstream settled the early tenders on Monday.

As announced on Oct. 19, the offers cover the company’s $650,947,000 of 7¾% senior notes due 2020, $809.31 million of 7¾% senior notes due 2021, $441,151,000 of 7½% senior notes due 2022 and $343,457,000 of 7½% senior notes due 2023.

For the 7½% senior notes due 2022 and 7½% senior notes due 2023, Windstream is offering new 6 3/8% senior notes due 2023.

The company will issue $1,080 of the new notes for each $1,000 principal amount of the 7½% senior notes due 2022 and $1,075 of new notes for each $1,000 principal amount of the 7½% senior notes due 2023.

Both figures include $50 of new notes per $1,000 that will only be issued to holders who participate by the early tender date.

After that deadline, the amount on offer is $1,030 for the 2022 notes and $1,025 for the 2023 notes.

The exchange ends at 11:59 p.m. ET on Nov. 14.

As of the early deadline, holders had tendered $167,079,000 principal amount, or 38%, of the 2022 notes and $217,262,000 principal amount, or 63%, of the outstanding 2023 notes.

In exchange, the company will issue $413,857,000 principal amount of new 6 3/8% notes.

The company said it plans to accept for exchange all of the early tendered 2022 notes and 2023 notes.

For the 2021 notes, investors had tendered $211,685,000 principal amount, or 26%, of the outstanding 2021 notes, according to a previous company announcement.

The company accepted for exchange $179,871,000 of the 2021 notes on a prorated basis and in exchange issued $139,843,000 principal amount of new 6 3/8% notes and about $50 million principal amount of 8 5/8% senior first-lien notes due 2025.

For the 2020 notes, the company received early tenders for $195,365,000 principal amount, or 30%, of the outstanding 2020 notes.

The issuer accepted for exchange $157.97 million principal amount of the 2020 notes on a prorated basis in exchange for about $150 million principal amount of new secured notes.

Windstream will also pay accrued interest up to but excluding the settlement date in cash.

The company previously said that it is carrying out the exchanges to extend is maturity profile and to “enhance its liquidity position over the coming years.”

More details

For the 7¾% senior notes due 2021, holders have two options.

They may choose new 6 3/8% senior notes due 2023, in which case the company will issue $1,100 principal amount of new notes for each $1,000 principal amount of existing notes.

Alternatively, they may opt for new secured notes due 2021, in which case Windstream will issue up to $50 million of the new notes at the rate of $950 principal amount per $1,000 principal amount of existing notes.

If this option is oversubscribed, holders then have a further choice for any notes beyond those accepted for exchange into new secured notes. They may either exchange the excess notes for new 6 3/8% notes due 2023 at the rate of $1,100 principal amount of new notes for each $1,000 principal amount of existing notes or exchange the excess notes on the same terms subject to a cap on the new 6 3/8% notes of $587 million less the amount issued in the offer for the 2022 and 2023 notes and the amount issued under the first option for the 2021 notes. The cap is now reduced to $282 million.

As with the exchange for the 2022 and 2023 notes, all the amounts on offer include $50 of new notes per $1,000 that will only be issued to holders who participate by the early tender date of 5 p.m. ET on Oct. 31.

The exchange will remain open until 11:59 p.m. ET on Nov. 14.

Windstream will also pay accrued interest up to but excluding the settlement date in cash.

For Windstream’s 7¾% senior notes due 2020, holders will receive new secured notes due 2021 at the rate of $950 principal amount per $1,000 principal amount of existing notes.

The amount of new notes that may be issued is capped at $50 million.

As with the other exchanges, the amount on offer includes $50 of new notes per $1,000 that will only be issued to holders who participate by the early tender date of 5 p.m. ET on Oct. 31.

The exchange ends at 11:59 p.m. ET on Nov. 14.

Windstream will also pay accrued interest up to but excluding the settlement date in cash.

The early settlement date is now expected to be Nov. 3 but may be rescheduled, the company noted.

Windstream said it denies that the alleged default has occurred and has filed a complaint seeking a judicial declaration that there has been no default in connection with the spinoff and related transactions.

Global Bondholder Services Corp. (866 807-2200 or 212 430-3774) is information and exchange agent.

The company is also offering $250 million of new secured notes.

Consent bid

In addition, the company secured the needed majority of consents to amend its 6 3/8% senior notes due 2023 in the solicitation that ended at 5 p.m. ET on Nov. 6, extended from 5 p.m. ET on Nov. 3.

Windstream executed a supplemental indenture to the 6 3/8% notes, and the proposed waivers and amendments are now operative, the release noted.

The issuer said it also obtained the needed consents to amend the 2020 notes and the 2023 notes by the end of the solicitation at 5 p.m. ET on Nov. 1.

For the 2021 notes and 2022 notes, the solicitations will continue until 5 p.m. ET on Nov. 14.

Windstream previously said it extended the solicitation for the 6 3/8% notes by one business day to allow note trustee U.S. Bank NA to authenticate the new 6 3/8% notes, a step required to complete the exchange offers.

As announced Nov. 1, Aurelius Capital Master, Ltd. said it was contesting the new 6 3/8% notes due 2023 to be issued under exchange offers, which it says may be prohibited by the note indenture.

As previously reported, Aurelius claims the issue would breach the terms of the notes indenture that restricts Windstream’s incurrence of debt.

Aurelius said it expects to dispute the “validity” of the new 6 3/8% notes, possibly in court, and is issuing the notice “for the purpose of precluding any future holders of the new notes (whether acquired in the exchange offers or through subsequent resale) from asserting a defense that they acquired the new notes in good faith and without notice of any dispute as to the validity of new notes or defect in their issuance.”

Solicitation history

As announced, Windstream is seeking consents from holders of four note series to waive alleged defaults for transactions related to the spinoff of Uniti Group, Inc. and to amend the indentures governing the notes to give effect to those waivers and amendments.

The consent payment on offer is $2.50 per $1,000 principal amount.

Windstream is also solicitating consents for its existing 6 3/8% senior notes due 2023.

The solicitation is similar except apart from the timing.

The early consent payment is $2.50 per $1,000 principal amount, and the subsequent consent payment is $2.00 per $1,000 principal amount.

Windstream is a Little Rock, Ark.-based networking and telecommunications company.

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