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August 30, 2024
Paul H. Sunu
Chief Executive Officer
Windstream Parent, Inc.
4005 Rodney Parham Road
Little Rock, AR 72212
Re: Windstream Parent, Inc.
Registration Statement on Form S-4
Filed July 29, 2024
File No. 333-281068
Dear Paul H. Sunu:
We have reviewed your 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.
Form S-4 filed July 29, 2024
Questions and Answers About the Transactions and Special Meeting
What will I receive in the Merger, page 3
1. You state on the cover page that Windstream s pre-closing
equity-holders will receive up
to 35.42% of the New Uniti common stock after the merger. However, in
this Q&A, you
state that the legacy Windstream stockholders will hold 38% of the
post-merger common
stock of Uniti. Please clarify the reasons for the differences.
Are there any Uniti stockholders who have already committed to voting in favor
of the Merger
Proposal..., page 10
2. Please disclose that Uniti currently expects that its directors and
executive officers will
vote their shares in favor of the Merger Proposal and each of the
proposals in the proxy
statement/prospectus. Taking into account the votes that have already
been committed,
state the total percentage of votes that are still needed for the
approval of each proposal.
August 30, 2024
Page 2
Summary Proxy Statement/Prospectus, page 12
3. Please provide a more detailed description of Elliott Investment
Management and its role
with both Uniti, Windstream, and the merger transaction and related
transactions. We
note, for example, that Elliott is the largest shareholder of Windstream
and will continue
to be the largest stockholder of New Uniti, having board director
rights, preferred stock,
etc. We note that New Uniti will not have a Corporate Opportunity
obligation for New
Uniti. To the extent material, clarify whether Elliott has a significant
interest in competing
telecommunication assets or portfolio companies that may cause conflicts
of interests.
4. Please add a Q&A that highlights the control of Elliot will as to the
post-merger company
and potential conflicts of interests, such as its New Uniti common stock
holdings, its
board designation rights, its New Uniti warrants, and its preferred
stock and rights for
New Uniti to repurchase that preferred stock in 10 years.
5. We note that Uniti was spun-off from Windstream in 2015, but Windstream
s bankruptcy
proceedings in 2019 and 2020 involved various disputes between
Windstream,
Windstream s creditors, and Uniti over the master lease agreements of
Uniti s ILEC and
CLEC assets. Please briefly describe these disputes, how they were
resolved, and if there
were continuing disputes over these agreements between Windstream and
Uniti.
6. As noted in the Background of the Transactions, there were many attempts
for Uniti or
other potential acquirers of Uniti to acquire both Uniti and Windstream
and re-combine
their assets related to the ILEC and CLEC MLAs. Please clarify the
percentage of revenue
of Windstream is related to these MLAs, and similarly the percentage of
revenue that Unit
derives from the MLAs with Windstream.
7. We note that BlackRock and Vanguard are both principal shareholders
Uniti. Please
clarify their roles in the merger negotiations, if any, and whether they
have agreed or
indicated they will support the merger proposals.
8. With respect to the Windstream Rights Offering and Tender Offer, please
clarify whether
it is intended to make Elliott and Legacy Investors the sole
shareholders of Windstream
and cash out all other Windstream investors. If so, please clarify the
percentage of
Windstream shareholders that will tender their shares and whether they
have the ability to
continue to decline the tender offer and receive Uniti sharers in the
merger.
Summary Historical Financial Data of Windstream, page 25
9. We note your non-GAAP measure of Adjusted EBITDA appears to have
adjustments for
normal, recurring cash operating expenses. Tell us why you believe these
adjustments are
appropriate or revise accordingly. Refer to Question 100.01 of the
Division of
Corporation Finance s Compliance & Disclosure Interpretations on Non-
GAAP Financial
Measures.
Unaudited Pro Forma Condensed Combined Financial Information, page 70
10. We note you disclose on page 155 that, "following the Closing, the
combined company
will not qualify as a real estate investment trust for U.S. federal
income tax purposes."
Prominently disclose that information in your unaudited pro forma
condensed combined
financial information. Tell us why you did not adjust for the change in
income tax status
in your pro forma financial statements. We refer to guidance in SAB
Topic 1:B:1
August 30, 2024
Page 3
Question 3.
Unaudited Pro Forma Condensed Combined Balance Sheet, page 73
11. Present in 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.
12. Regarding the reduction of the historic Uniti accumulated deficit, we
note the disclosure
in Note 6D. Present in separate columns in your pro forma balance sheet
and income
statements, the pro forma effects of the acquisition of the Windstream
business and the
settlement of pre-existing relationships in accordance with Rule
11-02(b)(4) of Regulation
S-X.
Unaudited Pro Forma Condensed Combined Statement of Income, page 75
13. Please present the elimination of intercompany transactions in a
separate column in the
pro forma income statements.
14. We note since Uniti is the accounting acquirer in the reverse merger,
from the perspective
of a legacy Uniti stockholder the exchange ratio results in a reverse
stock split. Please
give pro forma effect to this in the Uniti historical earnings (loss)
per common share
information. Also, clearly disclose this circumstance where you disclose
the details of the
merger.
Estimated preliminary purchase consideration, page 78
15. With regards to footnote (v), please disclose in quantified detail, each
pre-existing
relationship being settled. Disclose how you calculated the effective
settlement amount
for each pre-existing relationship as of March 31, 2024. Also, explain
to us your basis for
including the settlement of pre-existing relationships as part of the
purchase consideration.
Preliminary purchase price allocation, page 79
16. Please explain to us your basis in GAAP for eliminating pre-existing
relationship balances
with Uniti in you purchase price allocation. Tell us why you are not
accounting for the
termination of the relationships in accordance with the relevant
accounting principles for
such transactions in accordance with ASC 805-10-25-20, rather than in
your purchase
accounting.
17. Please disclose and explain to us why your estimate of the fair value of
the Windstream
property, plant and equipment is significantly less than the carrying
value reported in the
Windstream financial statements. Tell us why an impairment was not
reported in the
historic financial statement of Windstream.
18. Please explain to us why the estimated useful life of 8-10 years
assigned to the customer
relationships intangible asset is reasonable. In this regard, we note
Windstream provides
broadband to residential and small business customers and Windstream's
historic estimated useful life of 4-5 years for similar assets.
19. Regarding your valuation of advance payments and the elimination of
deferred
commissions and deferred costs, please explain to us your consideration
of the guidance
August 30, 2024
Page 4
in ASC 805-20-30-27 through 30-30.
Note 3. Adjustments to Uniti Historical Financial Information, page 81
20. We refer to your adjustment 3AA which states that it, "Represents the
reclassification of
Uniti s rental and service revenues from Uniti Leasing (Rentals),
Uniti Fiber (Rentals),
Uniti Leasing (Service) and Uniti Fiber (Service) to Service revenues."
Tell us why the
new entity will no longer separate rental revenue from service revenue.
We refer to
guidance in Rule 5-03.1 of Regulation S-X.
Note 6. Adjustments to the Unaudited Pro Forma Condensed Combined Financial
Information,
page 90
21. We refer to adjustment 6D. It appears you are adjusting for both
consideration paid and
eliminations of intercompany balances. Given the magnitude of
adjustments please
disclose a detailed presentation of adjustment 6D to help readers
understand all aspects of
the transaction.
22. We note that some of your adjustments, such as adjustment 6D through 6L,
appear to be
one sided entries and or do not balance. Please revise accordingly and
disclose the full
effect of each adjustment.
23. We refer to adjustment 6HH. Please disclose how the net gain, as a
result of the settlement
of pre-existing relationships between Uniti and Windstream, was
calculated. Explain in
detail how the settlement of pre-existing relationships between Uniti
and Windstream
discussed in Note 2(v), Note 4, and Note 6D affected the net gain in
adjustment 6HH.
24. With regard to adjustment 6GG, please expand your disclosure to explain
why you
reversed the historical amortization expense for deferred commission and
deferred costs
to fulfill.
Liquidity and Capital Resources Following the Merger, page 128
25. Please expand disclosure to analyze New Uniti's ability to generate and
obtain adequate
amounts of cash to meet its requirements and its plans for cash in the
short-term (i.e., the
next 12 months from the most recent fiscal period end required to be
presented) and
separately in the long-term (i.e., beyond the next 12 months). We refer
to guidance in
Item 303 of Regulation S-K.
Certain Unaudited Prospective Financial Information, page 165
26. You provide various financial projections provided by the management of
Uniti through
the end of the term of the 2030 MLAs with Windstream. We note that
projections include
such detailed information such as annual rent payments related to the
MLAs. We note,
however, that Windstream s management estimates do not include such
detailed
information. Please clarify whether Windstream s management provided
such data or
similar information to Uniti, and if so, please disclose this
information or explain why
they are not material. Further, please provide more detail as to how
Uniti's management
calculated the annual estimated rent payments under the Windstream MLAs
and clarify
the extent to which they are variable in nature and dependent upon the
information
provided by Windstream management.
August 30, 2024
Page 5
27. In the Background of the Transaction section, you mention that potential
merger partners
and acquirers revised terms, or sought to revise terms, as a result of
the downturn in the
telecommunications and internet services industries. Please clarify
whether these
projections still reflect the downturn, partly as a result of pandemic
and other reasons,
inflation or weaker near term consumer demand.
Delaware Conversion Proposal, page 228
28. You indicate that Uniti investors will receive significant tax
advantages if Uniti were to
convert to a Delaware corporation prior to effectiveness. Please clarify
here and in the
Q&A section as to explain the tax advantages related to the timing of
the conversion.
Further, please explain the general tax differences from owning a
security that is a
Maryland REIT entity versus a Delaware corporation.
29. We note that the up-REIT structure of Uniti was intended to provide tax
advantages for
Uniti to acquire new assets related to telecommunication assets. Please
provide a brief
description of the current up-REIT structure and how it will change upon
conversation the
reorganization and merger transactions under a new Delaware holding
company. Please
clarify whether this change will impact your ability to acquire new
infrastructure assets in
a tax efficient manner post-merger.
Beneficial Ownership of Securities, page 260
30. You present a beneficial ownership table for New Uniti that includes
pre-merger
beneficial ownership that reflects the Pre-Closing Windstream
Reorganization that does
not include any equity holders that will surrender their interests in
the Windstream Tender
Offer. Since these transactions have not yet occurred and will not until
closing on a post-
effective basis, please include a current beneficial ownership table of
Windstream
Holdings II, LLC.
Certain Relationships and Related Party Transactions, page 265
31. We note that you disclose that New Uniti does not have any related party
transactions
since its creation in April 2024. Since New Uniti is currently has
limited activity prior to
the merger transactions and reorganization, please revise this section
to include related
party transactions for all Uniti and Windstream entities for the past
three prior fiscal years
that will be included in the post-merger New Uniti entity. You should
include the related
party transactions that will occur as part of your merger and
reorganizations, including
those with Elliott Investment Management.
General
32. Please update your filing to include financial statements for the six
months ended June 30,
2024.
August 30, 2024
Page 6
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
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