Report: Windstream, Uniti buys in the eyes

Windstream Holdings and Uniti Group Inc., both based in Little Rock, could be reunited if a private equity group’s plan comes to fruition.

The Wall Street Journal reported Wednesday that Zayo Group LLC of Boulder, Colorado, was trying to buy the companies. Citing anonymous sources, the newspaper said the talks began in June, with terms of sale of around $ 3.5 billion, or $ 15 per share, being discussed initially, but that they will end. are recently arrested.

Arkansas company executives largely declined to comment on Thursday.

Uniti is a real estate investment trust primarily engaged in the acquisition and construction of infrastructure in the communications industry. It is listed on the stock exchange. Its stock closed at $ 14.40 on Thursday, up $ 1.39.

Uniti was once part of Windstream – both from Alltel Corp. – but transformed into a separate company in 2015, Windstream paying Uniti to access its broadband infrastructure.

“The owners of Zayo and Windstream believe that the combination of the two companies would accelerate the development of broadband in up to one million more homes by redirecting the nearly $ 700 million spent annually by Windstream on lease payments,” said some people, “some people said. the newspaper. The newspaper put the combined corporate debt at around $ 7 billion.

Annual lease payments to Uniti are actually $ 655 million, a Windstream spokesperson said Thursday.

Windstream emerged in September from a voluntary Chapter 11 bankruptcy filing in 2019. It sued Uniti in 2020, alleging that the original lease was too expensive and financially onerous. A settlement in the lawsuit resulted in a new long-term lease for Windstream’s access to Uniti’s network infrastructure.

Upon emerging from bankruptcy, Windstream became a private company owned by hedge fund Elliott Management Corp. and other former creditors.

“Without commenting on any specific potential transactions, any plan that will allow us to accelerate and deepen our fiber construction will be positive for Windstream and its customers,” Tony Thomas, President and CEO of Windstream said by phone Thursday.

“After talking internally, we’re not going to make any comments,” Kenny Gunderman, president and CEO of Uniti, said in an email.

Windstream, which is based in western Little Rock, has 1,125 employees in the state, including 950 in central Arkansas and about 10,900 company-wide, a spokesperson said. by Windstream.

Uniti has around 750 employees across the country, including around 70 at its headquarters in the Riverdale neighborhood of Little Rock, a spokesperson said. Uniti has 123,000 road miles of fiber conduit and over 7 million strand miles (road miles times the number of fiber strands), with more than 25,000 customer connections, according to its website.

Windstream has been supported in recent months by state and federal grants to extend broadband Internet service to rural areas in a number of states, including Arkansas.

On Wednesday, the company received most of the $ 554 million in awards from the Federal Communications Commission’s Rural Digital Opportunity Fund for Broadband Development. The FCC has awarded Windstream $ 330 million for projects in 14 states, including about $ 57 million in Arkansas. The FCC has listed 121 Windstream projects in Arkansas.

Windstream’s applications in four other states are pending, the company said.

“What our awards mean is Windstream’s commitment to building fiber in rural America,” Thomas said. “We were a very big beneficiary of RDOF [Rural Digital Opportunity Fund] funds, which we will combine with our own private investments, to develop broadband in rural America, including here in Arkansas. “

Windstream has also received regular broadband grants from the state, including a $ 10.8 million grant announced last month to expand service in Grant County, benefiting some 6,380 homes and businesses. Windstream will invest $ 7.2 million itself. It also received grants at the time for broadband expansion in Carroll, Faulkner, Perry, Searcy, Sevier and Van Buren counties.

These grants come from the state’s share of the US Federal Rescue Plan Act 2021 and are administered by the Arkansas Rural Connect Broadband program.

The company announced in May that it would expand its own fiber-building program in Arkansas and other states, creating 1,000 jobs.

Windstream also received nearly $ 5 million in Arkansas Rural Connect grants in 2020 which was funded by federal coronavirus aid, relief and economic security law. This has enabled Windstream to extend broadband to approximately 1,600 households and small businesses in Cleburne, Dallas, Montgomery and White counties. Windstream contributed nearly $ 1 million to the projects, which were completed this year.

In August, Uniti reported a slight profit in the second quarter of the year after recording a loss in the same quarter a year ago. Uniti reported net income of $ 48.6 million, or 20 cents per share, for the quarter, compared with a loss of $ 588.2 million, or $ 3.06 per share, for the same period year latest. Total revenue edged up to $ 268.2 million from $ 266.8 million in the second quarter of 2020.

The real estate investment trust reported operating funds of $ 106.7 million, or 41 cents per share.

Uniti also announced that it has completed the sale of its northeast fiber business to Everstream Solutions of Cleveland, receiving $ 135 million in cash. The deal included two 20-year agreements for Uniti to lease fiber in eight states to Everstream.

Uniti will release its third quarter 2021 results on November 4 before the market opens.

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