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Windstream/Uniti Settlement: Worse Than Expected

Mar. 09, 2020 2:07 AM ETUniti Group Inc. (UNIT), WINMQ367 Comments
Nils de Graaf profile picture
Nils de Graaf


  • Uniti gave up over 30% of shareholder value, or $1.5 billion.
  • Insiders negotiated special treatment that doesn’t pass the smell test.
  • Uniti may be worth $13-18 a share, if management answers serious questions.
  • Shareholders should be prepared to remove management.

Windstream (OTCPK:WINMQ) ("Win") and Uniti (NASDAQ:UNIT) recently settled their lawsuit that started in June 2019. As a result, Uniti transfers over a billion dollars of value to the Win creditors and the future shareholders. The settlement will cost Uniti five to ten dollars a share.

This article starts with an update on a previous article with the title "Windstream/Uniti Settlement: Better Than Expected". Well, with some more details, we may have to change our mind: "Worse than expected". Thereafter, we take a look at the value of the shares of Uniti. The last section discusses the problems arising from the settlement with respect to the 2030 lease renewal negotiations.

Win/Uniti settlement

The following list is almost a copy from this previous article, and the details can best be read there.

The settlement has five major aspects:

  1. Transfer of lease contracts generating a total of 30 million EBITDA.
  2. Issuance of 20%, or 38.6 million, of Uniti shares to certain investors.
  3. Transfer of dark fiber and the termination of exclusivity on certain of the lease assets.
  4. Equipment loan.
  5. Commitment to fund Growth Capital Improvements (GCIs).

The Big Stinker

One aspect that turned out to be very different from last analysis is around point 2, the stock issuance. It turns out that certain debtors, among which was the oligarch Paul Elliot Singer of Elliot Capital, negotiated for themselves a private transaction under which they will purchase Uniti shares at a price far below market. The Uniti shares are not even transferred to the bankrupt estate of Win to compensate all stakeholders, they go directly to these investors.

Regarding the strangely low stock price, Uniti has this to say:

at $6.33 per share, which represents the closing price of Uniti common stock on the date when an agreement in principle of the basic outline of

This article was written by

Nils de Graaf profile picture
I have a structured finance background, securitisations. Currently I am an opportunistic asset manager.

Analyst’s Disclosure: I am/we are long UNIT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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