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newflow: what are your current/updated thoughts regarding winmq? Thx
newflow: can you provide your best guess regarding timing for this entire process to play out with Windstream (before we know for sure if we get recovery and how much / what form it is in)? I apologize if you’ve already provided this expected timing. Thank you!!!!!
Thx! Yes, I realize that Judge Drain hasn’t ruled on the Charter damages yet. My point is, why hasn’t he ruled on this yet???? He has had more than enough time to do so. Assuming that your theory that WINMQ will be allowed to “gather the scraps”, I’m thinking that Judge Drain is holding out the Charter damages in order to allow some prime filets and porterhouses to be included amongst these scraps for us.
newflow: what do you think is going on with the Charter false advertising litigation? A verdict regarding damages still hasn’t been announced one way or the other which seems very curious to me...
Agreed. The shares had to be truly cancelled in order to be compliant with the reorg plan.
However, I think that we will be given the option here within the next month to redeem our shares in exchange for agreeing not to sue the debtors. If the debtors don’t make this offer, they will have a massive shareholder lawsuit liability (recall that Windstream turned down a $1.5B loan by Elliott, post Aurelius ruling, that would have kept Windstream out of bankruptcy).
Elliott is the undisputed king of lawyer tricks. Alongside Aurelius.
Windstream commons might be reinstated under a different cusip so that they can negotiate a settlement post-effective date of the reorg. There is precedent for that. Especially since Windstream is making a public to private company transition. And especially since the Windstream/Charter litigation award hasn’t been announced yet. So, nothing is close to being set in stone yet.
Bingo! New WIN will have free cash flow of $600 million per year and rapidly growing so its value will be $5-15 billion. WIN has made huge gains via UNIT lease revision, NOL tax benefit, and pending Charter litigation award so the pie to split up here is massive.
You could be correct that WINMQ is being paid something by Elliott. I haven’t seen any news article state that commons are being cancelled.
Would you mind copying / pasting more of this Law 360 article for everyone?
Thanks DD14! Would you mind expanding on your message more? Just explain what you are saying more to all of us. That would be very helpful!
I’m on the exact same page as tutt1126. Drain is going to absolutely HAMMER Charter with a massive damages number on this case. It’s an egregious/textbook Lanham Act violation and he is going to make an example of them. This sort of violation is essentially the reason that the Lanham Act was passed in the first place.
The Charter litigation is looking very likely to result in a large damages award to Windstream. It was a brazen, textbook violation of the Lanham Act, which federal judges take very seriously. Judge Drain is about to make an example out of Charter, to the benefit of Windstream. Probably a few hundred million $. Damages ruling will come any day - this week or next probably. Charter will likely then settle with Windstream on a lesser, but still very large, value. This will become an embarrassment for Charter so they won’t want to draw it out too long. The appellate judge (Judge Furman) works very, very closely with Judge Drain so the odds of Charter winning an appeal are low.
New terms that Uniti is offering Windstream to settle the master lease dispute. Page 3, 4th paragraph: https://investor.uniti.com/static-files/199c38ac-e42e-4b2f-8887-6ea35c172c9d
CHARTER FOUND LIABLE IN WINDSTREAM FALSE ADVERTISING CASE: https://www.google.com/amp/s/www.law360.com/amp/articles/1229717
Obviously, no one can be certain. However, I think that the very large volume days (one was 2.2 million shares, one around 900 thousand shares, etc) are due to equity swaps by institutions. Equity swaps allow the big shops to control shares in companies where they aren’t allowed to buy the shares outright (which would make sense in Windstream since it’s in Chapter 11 so many groups aren’t allowed to own the shares outright).
Some combination of reduction in the master lease rent to Uniti and a structured payout from Charter will levied a massive boost to Windstream’s free cash flow (which was already positive) and should create big value for commons (and keep them from being cancelled, although anything can happen in Chapter 11 so no way to guarantee this outcome). Windstream Investor Relations told me that the terms of the Charter settlement will not be disclosed, which leads me to believe that Windstream has been successful in their litigation against Charter. I think Windstream is all but guaranteed a big cut in master lease payment to Uniti but, once again, no guarantees on this. Despite the fact that Uniti is only showing around $35 million in quarterly net profit, Uniti is accounting for the Windstream master lease on a cash basis (and not a long term contract basis) so when a new long term lease is signed, from an accounting (net profit / loss) basis, this will improve the numbers for Uniti.
To me, the current low value in Windstream unsecured bonds is indicative of turmoil in the broader markets, coupled with the fact that many institutions can’t own any securities of companies in Chapter 11 rather than an indication of Windstream’s odds for all parties to be made whole.
The most recent monthly operating report showed Windstream’s revenue increased over the previous month, which would be great if it indicated a trend moving forward that their revenue is headed back up. The big net losses in these monthly operating reports are accounting related and not cash flow related.
The government bandwidth auctions that Windstream currently won (for $27 million), should be phenomenal investments in the long term, largely because Windstream operates in areas where they have very little competition.
The biggest value creator in Chap 11 for Windstream is the $3.2 billion in losses that they can carry forward indefinitely in the form of tax benefit.
Long story short, I think Windstream commons will be golden here in a few months but no way to know for sure.