Windstream Gets Greenlight for $1 Billion in DIP Funding

A New York bankruptcy judge Tuesday gave telecommunications company Windstream Holdings permission to tap into $1 billion in debtor-in-possession financing.

Judge Robert Drain gave Arkansas-based broadband provider Windstream permission to use the $1 billion in financing it secured from Citigroup Global Markets in February, overriding an objection from an indenture trustee for the company’s unsecured noteholders.

The judge handed Windstream interim approval to tap into $400 million of its DIP financing the day after its February Chapter 11 filing, when the company told him a district court ruling earlier in the month had thrown it into an unexpected liquidity crisis.

On Feb. 15, U.S. District Judge Jesse Furman ruled in favor of Windstream noteholder Aurelius Capital Management, finding a 2015 real estate spinoff by Windstream had triggered the default of notes held by Aurelius, and that Windstream owed the hedge fund nearly $310.5 million.

The company told the court the ruling effectively cut it off from its $450 million credit facility and left it with only $6 million cash on hand, which forced Windstream to rush into bankruptcy to secure funding until it can resolve the situation with a restructuring. According to the company’s Chapter 11 declaration, it currently has about $5.6 billion in funded debt.

The full Citigroup package consists of a $500 million credit facility and a $500 million term loan.

The sole objection at the hearing came from U.S. Bank N.A., which said it was serving as the indenture trustee for the holders of more than $1 billion in unsecured Windstream notes.

The bank argued the adequate security provisions of the package were excessive and said it was concerned the package could result in liens on currently unencumbered real estate the company spun off in a sale-leaseback transaction in 2015.

Windstream is represented by Stephen E. Hessler, James H.M. Sprayregen, Marc Kieselstein, Ross M. Kwasteniet, Cristine Pirro Schwarzman, Brad Weiland and John R. Luze of Kirkland & Ellis LLP.

U.S. Bank is represented by Walter H. Curchack and Vadim J. Rubinstein of Loeb & Loeb LLP and Clark T. Whitmore and Jason Reed of Maslon LLP.

The case is In re: Windstream Holdings Inc. et. al, case number 19-22312, in the U.S. Bankruptcy Court for the Southern District of New York.