Author Topic: WIN - Windstream  (Read 13567 times)

awindenberger

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Re: WIN - Windstream
« Reply #20 on: October 19, 2015, 02:48:06 PM »
I couldn't get comfortable with the FCF after capex. If I remember right , LTM EBITDA - CSAL lease - PF Interest - Capex was pretty close to 0. Would really like to see some material FCF to delever. I know some of their capex was considered "growth", but I wasn't close enough to the industry to be able to differentiate.

Are there any strong businesses here that really have the ability to grow over time or is this a trade to pick up a 90% levered, 95 cent dollar?

Good questions, which I don't yet have great answers for. The company claims half its capex ($400 million or so) is discretionary. They are in the final stages of rolling out a big speed upgrade to their broadband customers which finally makes them competitive (now offering faster speeds) with the cable insurgents that have been eating away at their revenues. WIN says customers are signing up for these faster speeds, but we still need to see evidence of this in the numbers.

As for FCF, if they use the $575 mn from the sale of the data center unit to retire debt (with coupons ranging from 6.4 to 7.9%), we have an extra $40 million a year. Throw in another $50 mn or so of FCF after the sale of their CSAL stake. I don't think we need their business to grow strongly to make this a big winner; they merely need to stabilize the declines. Revenue guidance was revised up (marginally) last quarter. Next earnings call will be very interesting.

I bought a small position in late June around $7.50 and wish I'd added more in late July under $5. With this sale they should have no trouble completing their $75mil stock buyback program, which would reduce the share count by almost 10% at current prices. That would allow them to increase the dividend by 10% next year with no change in total dividends paid. Long term shareholders have clearly suffered a lot, but the stock seems poised for good total returns going forward.



bargainhunter

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Re: WIN - Windstream
« Reply #21 on: November 05, 2015, 10:13:29 AM »
I thought the quarterly report was really positive. The lack of market reaction is a little baffling. Am I missing something?

- Executed $20 mn in share buybacks with another $50 mn at least to come
- Refinanced $290 mn in high coupon debt - will save $20 mn in annual interest expenses. And there is more of this to come (they have more capacity in their revolver)
- Most importantly, revenues are stabilizing after years of declines. Sequential growth over Q2, even without the CAF-2 revenues from the government.
- Using data center sale ($575 mn) to retire more debt, and accelerate upgrading of broadband network (increasing competitiveness vs cable)

I'd be surprised if they are not able to guide for flat to slightly increasing revenues and OIBDA in 2016. What would that mean for a stock that generates enough cash flow (ex "discretionary" capex) to buy back its entire free float in less than two years?

kab60

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Re: WIN - Windstream
« Reply #22 on: September 28, 2017, 12:34:06 PM »
How do you get comfortable that the underlying business is returning to growth?  This transaction has made the stub a levered play on Windstream returning to growth.  If revenues continue the historical decline they will most likely end up in distress due to the negative operating leverage working against them as revenues decline.  At some point the coverage ratios will decline and there may be stress on the payment to the REIT.  I am just having a hard time understanding how adding more leverage via the REIT payments makes sense for declining revenue business.  I have also told myself to stay away from leveraged businesses that have declining revenues/cash flows as I have rode a few of these to 0 on the way to BK.

This is a nice leveraged play if Windstream and other LECs return to revenue and cash flow.  I am just having a hard time seeing it with Windstream.

Packer
That was a nice call, Packer. Saved me a bunch. Anyway, what do you think about Uniti now? Isn't this somewhat similar to Sears/Seritage where even in a bankruptcy the REIT should do okay since the lease is senior to the rest of the obligations?

krazeenyc

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Re: WIN - Windstream
« Reply #23 on: September 29, 2017, 05:28:09 AM »
How do you get comfortable that the underlying business is returning to growth?  This transaction has made the stub a levered play on Windstream returning to growth.  If revenues continue the historical decline they will most likely end up in distress due to the negative operating leverage working against them as revenues decline.  At some point the coverage ratios will decline and there may be stress on the payment to the REIT.  I am just having a hard time understanding how adding more leverage via the REIT payments makes sense for declining revenue business.  I have also told myself to stay away from leveraged businesses that have declining revenues/cash flows as I have rode a few of these to 0 on the way to BK.

This is a nice leveraged play if Windstream and other LECs return to revenue and cash flow.  I am just having a hard time seeing it with Windstream.

Packer
That was a nice call, Packer. Saved me a bunch. Anyway, what do you think about Uniti now? Isn't this somewhat similar to Sears/Seritage where even in a bankruptcy the REIT should do okay since the lease is senior to the rest of the obligations?

Packer is not always going to be right... but when it comes to leveraged telcos -- I'm going to trust his expert opinion over my own lol! Packer has been one of the very best resources on this board -- really helped me learn a ton about the leveraged telcos/Cable companies. And not just learn, but make a lot of $$ and avoid losing $$ as well. Thanks Packer.

Packer16

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Re: WIN - Windstream
« Reply #24 on: October 01, 2017, 06:55:34 AM »
This is a situation to keep an eye on.  It appears that WIN has had revenue growth for the past 2Qs but the interest expense is equal to EBITDA-Cap ex, so the situation is not sustainable.  We are going to have some sort of restructuring & in that situation who knows who gets what.  The seniority of the assets lease will not be enforced as it will be a negotiated settlement.  Unless I missed something, this is different from SHLD/Seritage and SHLD bondholders received compensation from Seritage versus that not being the case here.  I would wait here to see what plays out.   Just mu 2 cents.

Packer

heth247

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Re: WIN - Windstream
« Reply #25 on: July 17, 2019, 09:04:53 PM »
This is a situation to keep an eye on.  It appears that WIN has had revenue growth for the past 2Qs but the interest expense is equal to EBITDA-Cap ex, so the situation is not sustainable.  We are going to have some sort of restructuring & in that situation who knows who gets what.  The seniority of the assets lease will not be enforced as it will be a negotiated settlement.  Unless I missed something, this is different from SHLD/Seritage and SHLD bondholders received compensation from Seritage versus that not being the case here.  I would wait here to see what plays out.   Just mu 2 cents.

Packer

Just want to bring this thread back to alive. Anybody (including Packer) still follow the WIN and UNITI (the previous CSAL) story?   

Basically WIN was forced into BK by hedge fund Aurelius for what they did in the spin off. And now WIN is trying to renegotiate the Master Lease with UNITI. From a legal point of view, WIN is standing at a weak point because they can only accept or reject the master lease. I think the play here is UNITI. If the master lease can stand with no cut, then UNITI will be at least a double.  Even if it is cut by e.g. $100M (from current $656M a year), UNITI's share price should still be higher than the current $8.5.  In addition, when WIN emerges from BK, it should be much stronger with much less debt, and more sustainable. What do you guys think?