Death going Forward Windstream And Pain For Uniti
Feb. 17, 2019 8:45 PM•UNIT
Summary
Shareholders in Windstream and Uniti Group were in for a nasty shock when, on February 15, courts ruled in favor of Aurelius.
This move results in serious consequences for Windstream, likely (but not necessarily) resulting in the firm's demise.
For Uniti, the result will be significant pain most likely, but it's probable the firm can survive.
It’s not a good day to own shares of either Windstream Holdings (WIN) or Uniti Group (UNIT). Both companies took a beating after the market closed on February 15th following news that the United States District Court of the Southern District of New York ruled in favor or Aurelius, a hedge fund that owns a majority of Windstream’s 6.375% 2023 Senior Notes, regarding whether or not Windstream, in spinning off Uniti and leasing back assets from it, breached their indenture. This move has not only thrown serious doubt into whether or not Windstream can survive, but has also created real worries for Uniti even as the company continues to diversify away from its former parent
A look at the ruling
Friday’s 55-page ruling made for an interesting heading-into-the-weekend evening read. It also, for probably every investor in Windstream and/or Uniti, likely resulted in a start to a bad weekend. This is because, in response to these developments, Windstream’s share price plummeted 57% in after-hours trading, while Uniti’s share price fell about 30%. Both moves are devastating for shareholders, but to see why, we should dig into the details to find out more.