Event Publicly Available Information:
On September 21, 2017, Windstream received a Notice of Default for Windstream Services, LLC 6.375 Senior Notes due 2023. On October 12, 2017, US Bank as indenture trustee for the 6.375 Senior Notes filed a motion for declaratory judgment seeking affirmation that:
(i) two defaults relating to a sale and leaseback transaction (the “Defaults”) have
occurred and are continuing under the Indenture, (ii) a notice of default sent by a Noteholder to
the Company in accordance with the Indenture on September 21, 2017 (the “Default Notice”) is
effective with respect to the Defaults, and (iii) in consequence of the foregoing, Events of
Default will result 60 days after the notice in the absence of a cure by the Company within that period.
Windstream responded to the declaratory judgement motion on October, 13. As a result of discovery required in relation to the declaratory judgement motion, Judge Furman tolled the expiration of the cure period until December 7, 2017. Concurrently, Windstream launched an exchange and consent offering seeking a waiver for defaults outlined in the September 21, 2017 default notice. Windstream contends that the exchange was successful and the notice of default has been waived. However, because the exchange transaction violated sections 4.09, 4.12 and 4.17 of the indenture, and many of the same issues raised in the original default notice, the exchange was invalid and the default was not waived.
On December 7, 2017 Aurelius delivered a bond acceleration notice declaring all the 6.375 Senior Notes due and payable pursuant to Section 6.02(a) of the Indenture. The failure to repay the notes upon receipt of the acceleration notice constitutes a Failure to Pay Credit Event.
The parties (US Bank, Windstream Services and Aurelius) are proceeding to litigate the issues raised in the Default Notice and Waiver of Default claim. We believe a Failure to Pay Credit Event has occurred. However, should the DC determine it has insufficient information to reach this conclusion it should toll the decision, leaving current CDS contracts outstanding, pending the outcome of the court proceeding which will provide final clarity.
Windstream Default Notice 8-K
Aurelius Notice of Default Letter
US Bank Declaratory Judgement Complaint
Judge Furman Rulling Tolling Cure Period
Windstream Bond Acceleration Notice 8-K
Aurelius Bond Acceleration Letter
Judge Furman Scheduling Timeline