View:
November 18, 2024
Paul H. Sunu
Chief Executive Officer
Windstream Parent, Inc.
4005 Rodney Parham Road
Little Rock, AR 72212
Re: Windstream Parent, Inc.
Amendment No. 2 to Registration Statement on Form S-4
Filed October 29, 2024
File No. 333-281068
Dear Paul H. Sunu:
We have reviewed your amended registration statement and have the
following
comments.
Please respond to this letter by amending your registration statement
and providing
the requested information. If you do not believe a comment applies to your
facts and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response.
After reviewing any amendment to your registration statement and the
information
you provide in response to this letter, we may have additional comments. Unless
we note
otherwise, any references to prior comments are to comments in our October 4,
2024 letter.
Amendment 2 to Registration Statement to Form S-4 filed October 29, 2024
Summary Historical Financial Data of Windstream, page 29
1. We note your response to prior comment 1. Given that Adjusted EBITDA
relates to a
debt covenant, we believe it should only be disclosed in the Liquidity
section of your
filing and only as it relates to the debt covenant. Please revise
accordingly.
Information about New Uniti, page 59
2. We note your statement that, "On a pro forma basis, New Uniti generated
approximately $4.3 billion and $2.1 billion of revenue and $1,110.4
million and
$131.9 million of net income for the year ended December 31, 2023 and
the six
months ended June 30, 2024." Whenever referencing pro forma net income
in your
filing, please add disclosure stating what portion of that net income is
non-recurring.
November 18, 2024
Page 2
3. We note your response to prior comment 11. Please provide a more balanced
discussion of New Uniti in your filing including highlighting that the
network assets
currently have economic obsolescence, are expected to continue to have
excess
service capacity, and discuss the rising replacement costs of assets used
in
telecommunications industry.
Unaudited Pro Forma Condensed Combined Financial Information, page 75
4. We note your response to prior comment 2. Please clarify your disclosure
as to how
you considered guidance in ASC 805-10-55-12(b) given that Elliot
affiliates will be
the largest minority shareholders of New Uniti (i.e. they will own 34.02%
of New
Uniti per disclosure on page 292). Explain why Elliot affiliates will own
73.2% of
New Uniti immediately prior to the acquisition. Also, disclose if the
composition of
the board is subject to change within a short period of time after the
acquisition date.
5. We note your response to prior comment 3. Please present the range of
possible
results from a favorable and unfavorable outcome of the private letter
ruling with
equal prominence pursuant to Rule 11-02(a)(10) of Regulation S-X.
6. We note your response to comment 5. Please clarify why your elimination
of
intercompany adjustments do not appear to balance. Please expand Note 9
to address
this issue.
7. We note your response to prior comment 6. It appears that Windstream is
accounting
for the 2020 Settlement as a lease modification while Uniti is accounting
for the 2020
Settlement as litigation expense. Given that this is the same
transaction, tell us why
the accounting is different and does not mirror one another.
8. We are considering your responses to prior comments 6, 18 and 20 and may
have
additional comments.
9. We note your response to prior comment 13. Please provide a footnote
explaining
with quantitative detail what makes up $429 million cash consideration to
be paid by
Uniti to Windstream.
10. Please total in footnote 2B the various amounts impacting additional
paid-in capital so
that this amount agrees with the amount of the corresponding adjustment
appearing on
the pro forma balance sheet on page 79.
11. With regard to valuation of assets acquired, please explain in detail why
the values of
PP&E and deferred tax asset were significantly modified in this
amendment. Tell us if
you learned something new or whether you changed your valuation
methodology.
12. Please quantify the amounts netted in adjustment 2J.
13. Regarding adjustments 4A and 4B, please provide specific explanations for
the reductions in property, plant and equipment. It is unclear why the
adjustments are
being made as apart of an elimination of pre-existing relationships.
Normally an
acquisition of tangible property would be recorded at fair value in the
purchase price
allocation.
14. We refer to adjustment 5AA. Please show the details of the amounts netted
in the
adjustment. Explain why additional debt resulted in less interest
expense. Also, adjust
for debt extinguishment expense as noted in adjustment 5D.
November 18, 2024
Page 3
15. Please quantify the amounts netted in adjustment 5D. Confirm all aspects
of the debt
refinancing, as noted on pages F-94 and F-95, are included in the
adjustment.
16. We note disclosure on page 47 that states, "Following the Closing, New
Uniti may,
but is not required to, consummate the Post-Closing Reorganization,
which would
combine Windstream s and Uniti s debt into a single silo capital
structure with a
common parent entity." Tell us how you considered whether the effect of
combining
Windstream's and Uniti's debt should be presented in the pro forma
financial
statements.
17. On page 27 you state, "The new supplemental indenture to the Windstream
2028
Notes Indenture became effective on September 18, 2024, but the
Windstream 2028
Notes Indenture Amendments included therein will not become operative
until the
date the consent fee is paid." Tell us how this is reflected in your pro
forma financial
statements and / or revise accordingly.
18. Please explain in footnote 7D your rationale for recording the deferred
tax assets net
of a valuation allowance of $448.4 million.
19. Please expand footnote 7CC so that your calculation of the adjustment to
depreciation expense is transparent.
20. Please expand footnote 7DD so that your calculation of the adjustment to
amortization
expense is transparent. This should include the calculation of total pro
forma
amortization based upon the assigned useful lives of acquired intangible
assets less the
amortization recorded in the historic financial statements.
Liquidity and Capital Resources Following the Merger, page 157
21. Disclose if legacy Windstream and Uniti have been in compliance with
their debt
covenants for the periods presented. Also, discuss the covenant
compliance
obligations following the merger.
Windstream Holdings II, LLC Consolidated Financial Statements
9. Leases, page F-38
22. It is not clear to us why you allocated $400 million in settlement
payments to the 1.8
million fiber strands miles relinquished by Windstream. This allocation
does not seem
to agree with Section 8 of the Settlement Agreement which states, The
APA
Purchase Price and IRU Purchase Price will constitute consideration for
the Acquired
Assets and the reversion of Windstream s exclusive right to use the
UOWL fiber
strand miles unless such amounts are materially inconsistent with the
appraisal of such
assets. Please explain.
General
23. Please update your financial statements for the nine months ended
September 30,
2024.
November 18, 2024
Page 4
Please contact Inessa Kessman at 202-551-3371 or Robert Littlepage at
202-551-3361
if you have questions regarding comments on the financial statements and
related
matters. Please contact Edwin Kim at 202-551-3297 or Jan Woo at 202-551-3453
with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Technology
cc: Ben Pedersen