Windstream Uniti Settlement Agreement

We learned last month that the two would go to court if they could not reach an agreement through mediation. Words such as “anticipate”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “believe”, “may”, “will”, “would”, “could”, “should”, “seek” and similar expressions or the negative of these terms are intended to identify these forward-looking statements. These statements are based on current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected, projected or expected. Although Uniti and Windstream believe that the assumptions underlying the forward-looking statements are reasonable, they cannot guarantee that their expectations will be met. In particular, the announcement is an agreement in principle whose implementation is subject to various uncertainties, including the need to negotiate final documents and obtain various approvals. Under the settlement agreement with Uniti, Uniti has agreed to invest up to $1.75 billion in network investments for Windstream by 2030. Uniti has also agreed to pay Windstream approximately $490 million and to acquire certain unused and unused fiber optic facilities from Windstream for an additional $285 million, which currently generates an annual OIBDAR of approximately $29 million. The two companies also reached an agreement in principle to resolve disputes related to Windstream`s Chapter 11 bankruptcy last year. “This agreement has significant strategic value for Uniti as it immediately allows the company to expand its national fiber presence with approximately 450,000 new miles of fiber strands and 1.8 million miles of existing fiber strands that can be leased by Uniti to a third party,” Gunderman added. For more details on the settlement, see filing 8-K filed today with the U.S. Securities and Exchange Commission. On the other side of the settlement coin, Windstream will be awarded certain Inalienable Use Rights (IEUs) for dark fiber, which currently generates annual EBITDA of approximately $21 million, and its rights to use 1.8 million miles of fiber strands currently leased to Windstream and unused or used for transmitted dark fiber ERUs. See settlement filing and 8-K filing with the Securities and Exchange Commission.

Windstream announced this morning an agreement with Uniti on their lease dispute, as well as a restructuring plan with senior creditors that must be filed by the end of March. On the day they were scheduled to take place in court, Windstream Holdings and Uniti Group announced the settlement terms of their master lease. With the proposed settlement, Windstream was able to significantly reduce its debt burden, while Uniti made concessions that expanded its national presence in fiber. Prior to Monday`s announcements, Windstream`s case v. Uniti was scheduled to go to court March 2-6 with Judge Robert Drain of the U.S. Southern District Bankruptcy Court in New York City. The settlement “is subject to the negotiation and execution of final documentation and certain regulatory approvals and conditions precedent, including approval by Uniti`s bankruptcy and U.S. bankruptcy court. Federal income tax compliance. This, in turn, had a domino effect on windstream`s lease with Uniti. Windstream is gaining access to Uniti`s network under a master lease that was set to expire in 2030.

“These agreements reinforce our statements that we have shared with our partners over the past year, particularly that we will be a stronger company with more opportunities for our partners to sell transformative solutions in the marketplace today,” said Milliron. “Over the past year, we have received prestigious awards for our solutions, introduced channel integration and are about to launch our brand new WE Connect partner portal. As we focus on the future and are about to renew ourselves, we want to continue to grow our strong program by continuing and relentlessly focusing on customer and partner experiences. Together with our partners, we will accomplish more. Uniti will also sell shares to certain senior creditors of Windstream at a price of $6.33 per share, which was Uniti`s closing price on settlement day. The total proceeds from the sale of the shares were set at $244.5 million. Windstream and Uniti also agreed to split the main lease into structurally similar agreements to govern Windstream`s ILEC and CLEC facilities. David Avery, 501-746-5876 Vice President, Corporate Affairs The settlement was in principle supported by lenders who hold more than 72% of Windstream`s outstanding first lien liabilities and more than one-third of each of the second lien creditors and unsecured bondholders, which include Elliott Management`s affiliates and other members of Windstream`s ad hoc creditor group. Elliott Management is Windstream`s largest creditor.

Matt Milliron, head of strategic channels and head of channels at Windstream Enterprise, welcomed the agreements in a statement. Kenny Gunderman, President and CEO of Uniti, commented: “We are pleased to have achieved a mutually beneficial outcome for Uniti and Windstream, which has been our stated goal from the outset. This agreement has significant strategic value for Uniti as it immediately allows the company to expand its national fiber presence with approximately 450,000 new miles of existing fiber strands and 1.8 million miles of fiber chain that can be leased by Uniti to third parties. The agreement also provides for further expansion in the coming years for further deployment of fiber, with us committing to invest up to $1.75 billion in capital in Uniti`s own leased assets to Windstream. Approximately 90% of our capital committed under the Settlement Agreement will be used to acquire or build new REIT-enabled fibre facilities with attractive returns. We look forward to a strong collaboration with Windstream as we focus on improving Windstream`s competitive position and the network windstream leases to Uniti.” Copies of the PSA and Uniti Settlement Agreement can be obtained free of charge from the Kurtzman Carson Consultants LLC website at Bill DiTullio, 501-850-0872 Vice President, Finance and Investor Relations Tony Thomas, President and CEO of Windstream, said, “Our agreement with Uniti will allow Windstream to significantly invest in fiber optic networks to significantly expand 1 Gigabit Internet service to consumers and position the company for sustainable growth and margin expansion after restructuring. Our goal remains to survive the restructuring as quickly as possible under the best possible conditions for Windstream and all our stakeholders. Chris King, 704-319-1025 Vice President, Investor Relations Under the terms of the settlement, Uniti has agreed to invest up to $1.75 billion in growth capital improvements, including “long-term fiber” and related assets in certain Windstream CLEC and ILEC properties during the initial term of the new leases. Uniti Group and Windstream Holdings have reached an agreement in principle to settle Windstream`s claims against Uniti. As part of Chapter 11 and Windstream`s reorganization efforts, Windstream`s creditors, UMB Bank and US Bank, filed an application in July 2019 stating that the payments were not leases but a financing agreement and should not be included in the insolvency proceedings.

He added that Windstream should not pay rent to Uniti and should instead keep the funds to repay its creditors. Uniti was established in 2015 when Windstream divested some of its network resources. Windstream announced last summer that it was trying to negotiate a lower price to use the Uniti network and even turn the lease into a financing contract. Uniti executives initially seemed to reject the idea of hiring an intermediary and cutting rental fees, and they even suggested they could kick Windstream out of their network if it didn`t make its payments. Windstream Holdings, Inc., a FORTUNE 500 company, is a leading provider of advanced network communications and technology solutions. Windstream provides data networks, basic transportation, security, unified communications, and managed services to midsize businesses, enterprises, and large customers in the United States. . .