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October 4, 2024
Paul H. Sunu
Chief Executive Officer
Windstream Parent, Inc.
4005 Rodney Parham Road
Little Rock, AR 72212
Re: Windstream Parent, Inc.
Amendment No. 1 to Registration Statement on Form S-4
Filed September 16, 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 August 30. 2024 letter.
Amendment to Form S-4 filed September 16, 2024
Summary Historical Financial Data of Windstream, page 28
1. We note your response to prior comment 9 regarding Adjusted EBITDA as
defined in
Windstream s debt agreements. Please tell us how you considered
Question 102.09 of the
Division of Corporation Finance s Compliance & Disclosure
Interpretations on Non-
GAAP Financial Measures with regards to your disclosure of this measure.
Unaudited Pro Forma Condensed Combined Financial Information, page 76
2. We note disclosure on page 8 states that, "As of the date of this proxy
statement/prospectus, an affiliate of Elliott (as defined below) is
Windstream s largest
equity holder, and affiliates of Elliott are expected to continue to be
the largest
stockholders of New Uniti after the Closing." Expand your disclosure to
explain how this
was considered when determining who is the accounting acquirer. Refer to
your basis in
October 4, 2024
Page 2
accounting literature.
We also note based on disclosure on page 11, that entities affiliated
with Elliott
Investment Management, L.P. (EIM) currently hold approximately 4.15% of
all Uniti
Common Shares. Disclose current common ownership between Windstream and
Uniti
and explain how common ownership was considered when determining
accounting for
this transaction. Refer to your basis in accounting literature.
3. We note your response to prior comment 10 and the disclosure under Note
1 on page 85.
Please clarify in your pro forma information, and give pro forma effect
to, the range of
possible results from a favorable and unfavorable outcome of the private
letter ruling.
Refer to Rule 11-02(a)(10) of Regulation S-X.
4. We note your response to prior comment 11. Since Windstream is the legal
acquirer in the
merger transaction, we believe any transaction that affects Windstream's
equity should be
transparently disclosed in the pro forma financial statements. As such,
we continue to
believe that you should show a separate column following the Windstream
historical as
adjusted information, the pro forma adjustments to give effect the
Windstream
reorganization. This should be followed by a column to present
Windstream as
reorganized prior to presenting the pro forma impact of the merger.
Refer to Rule 11-
02(b)(4) of Regulation S-X. If amounts are not yet known, please
disclose a range in
accordance with Rule 11-02(a)(10) of Regulation S-X. Also, tell us how
you determined
the ownership percentage post-merger if Windstream's equity is unknown.
Explain why
you used Windstream common units outstanding pre-close in determining
purchase price
in Note 2.
5. We note your response to our prior comment 13. However, it appears that
some
elimination of intercompany transactions are presented in Note 7 and
some are presented
in Note 4. As previously requested, please present the elimination of
intercompany
transactions in a separate column in the pro forma income statement.
6. Please explain to us how the reduction in revenue of $791,410, under
Note 7 on page 82,
relates to the reduction in cost of services of $677,108 disclosed on
page 96.
7. We note your response to prior comment 22. Please clearly disclose how
each adjustment
balance is derived, similar to what you presented in the response. If
you aggregate values,
the detail should also be disclosed. Consider presenting the purchase
price allocation as
one self balancing adjustment.
8. We note per your in disclosure on pages 26 - 27 that on September 11,
2024, Windstream
initiated a Consent Solicitation. Explain to us your consideration of
giving effect to the
Consent Solicitation in your unaudited pro forma financial statements.
Also, disclose the
Consent Solicitation as a subsequent event in your financial statements.
9. We note your response to prior comment 17 and the related disclosure on
page
87. Regarding the adjustment to the estimated fair value of tangible
assets for economic
obsolescence, please clarify in the last paragraph on page 87 the nature
of the external
conditions, specify the referenced market you anticipate will experience
a decline in
demand and explain to us the basis for your assumptions. Also, please
tell us if your
assumptions are consistent with those relied upon by management when
negotiating the
value of the purchase consideration and when estimating useful lives of
the Windstream
October 4, 2024
Page 3
tangible and intangible assets. Refer us to your disclosures where you
describe this
anticipated decline in demand.
10. We note in your preliminary purchase price allocation, you anticipate
recording $332,432
of goodwill. Explain to us why it is reasonable to reduce the fair value
of PP&E for
economic obsolescence while recognizing goodwill. Tell us why it is not
more reasonable
to conclude there is significantly less obsolescence and no goodwill.
11. In your response to prior comment 18 you said "the company expected
lower customer
attrition rate going forward due to Windstream s significant
investments into expanding
its fiber network and maintaining high speed capabilities on its copper
network. High
available service speeds generally translate into strong consumer
customer retention. In
addition, Windstream intends to implement auto pay enrollment and
pricing strategies to
reduce go-forward attrition. Accordingly, the decrease in the
anticipated customer attrition
rate directly results in an extension of the periods in which future
cash flows are expected
to be generated from the asset." Reconcile this statement with the
anticipated PP&E
"economic obsolescence, which accounts for external conditions and
decline in market
demand" disclosed in the last paragraph on page 87.
12. We refer to Note 7 on page 99, to avoid confusion between "Settlement of
Pre-Existing
Relationships" and the "Settlement Agreement" related to a prior legal
settlement between
Windstream and Uniti, consider being more descriptive in the name
"Settlement
Agreement."
13. We note disclosure on page F-91 to F-93 refers to various equity-based
compensation for
cash consideration of $13 per unit payable on or about May 2, 2025, or
upon
consummation of the merger with Uniti, whichever is earlier. Tell us if
and how this
transaction is reflected in your pro forma financial statements.
14. For clarity, please identify in the heading appearing in the table on
page 99, the entity that
"previously recognized net assets (liabilities)."
15. Regarding the income tax expense adjustments in the Windstream income
statements on
pages 95 - 96, disclose in detailed supporting footnotes how the amounts
were calculated
and explain the basis for your assumptions. Refer to Rule 11-02(b)(5) of
Regulation S-X.
Liquidity and Capital Resources Following the Merger, page 137
16. We note your response to comment 25 and new disclosure provided on page
137. However, your disclosure does not "analyze" your ability to
generate and obtain
adequate amounts of cash following the Merger. Please expand disclosure
to provide a
robust analysis of your ability to meet short-term and long-term
liquidity needs after the
Merger. Also, disclose any new financing such as the Consent
Solicitation.
The Merger
Litigation Related to the Merger, page 199
17. Please discuss the nature of the alleged omissions of information in the
proxy
statement/prospectus relating to the Transactions by the two Uniti
stockholders.
Windstream Holdings II, LLC Consolidated Financial Statements
9. Leases, page F-38
October 4, 2024
Page 4
18. With a view towards clarifying disclosure, please explain to us your
accounting for
the master lease agreements and other related arrangements with Uniti.
Identify all of the
terms of your arrangements with Uniti that are relevant to your
accounting conclusions
along with references to the supporting accounting literature. Tell us
if you are accounting
for the leases as finance leases and if not, explain why.
19. Please explain your accounting for the $400.0 million in quarterly cash
installments. Tell
us the purpose for the payments and explain your basis for recording the
Settlement
payments as an accretion to the Company s operating lease liability.
Condensed Consolidated Balance Sheet, page F-65
20. We note in Note 7 on page 99 Uniti reports deferred revenue in
connection with the
Windstream Leases of $845,272. Explain to us the facts and circumstances
that resulted
in this deferred revenue balance and tell us if there is a corresponding
prepaid rent amount
reported on the Windstream balance sheet. If not, please explain why.
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