Friday, April 24, 2015

Windstream Completes Spinout of Network Assets Division into REIT

Windstream completed its previously-announced, tax-free spinoff of select telecommunications network assets into a new company, Communications Sales and Leasing (Nasdaq:CSAL), an independent publicly traded real estate investment trust (REIT).

In addition, Windstream also announced the near completion of a one-for-six reverse stock split of Windstream's shares.

"Today's successful spinoff will significantly advance our commitment to deliver value for shareholders," said Tony Thomas, president and chief executive officer of Windstream. "This innovative transaction has made Windstream a stronger company with less debt and increased capacity to invest in our network to provide advanced communication
services to customers. I'm also excited about the growth prospects of CS&L."

In connection with the spinoff, Windstream repaid debt in an aggregate amount equal to $2.4 billion under its outstanding credit agreement. Windstream also received cash proceeds of $1.035 billion, which is anticipated to be used to retire additional debt over the next 30 days.

In July 2014, Windstream announced a bold plans to spin off its fiber and copper network, along with certain other assets, into an independent, publicly traded real estate investment trust (REIT).  The network operations business would then lease back the physical assets to Windstream through a long-term triple-net exclusive lease with an initial estimated rent payment of $650 million per year.

The company said the separation of its physical network from its services business will enable it to become a more nimble competitor, while accelerating network investments, and maximizing shareholder value. The new REIT would be open to diversify its assets through acquisitions.

"This transaction will make Windstream a more nimble competitor in today’s increasingly dynamic communications marketplace and accelerate our deployment of advanced communications services," said Jeff Gardner, president and CEO of Windstream. "Additionally, the REIT will have geographically diverse, high-quality assets and sustainable cash flows with the ability to grow and diversify over time."

Marvell Trims Guidance

Marvell Technology announced preliminary financial results for the first quarter of its fiscal 2016, saying it now expects revenue to be below the company's previous outlook. Marvell now expects first quarter of fiscal 2016 revenue to be in the range of $710 million to $740 million, compared to the previous expectation of $810 million to $830 million.

The cited weaker than previously expected PC and storage markets and lower than expected emerging market demand.