Windstream 2009 Annual Report Download - page 91

Windstream Corporation
Form 10-K, Part I
Item 1A. Risk Factors
• Limit our flexibility in planning for, or reacting to, changes in our business and the telecommunications industry;
• Place us at a competitive disadvantage compared with competitors that have less debt; and
• Limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity.
In addition, our ability to borrow funds in the future will depend in part on the satisfaction of the covenants in our
credit facilities and its other debt agreements. If we are unable to satisfy the financial covenants contained in those
agreements, or are unable to generate cash sufficient to make required debt payments, the lenders and other parties to
those arrangements could accelerate the maturity of some or all of our outstanding indebtedness.
We may not generate sufficient cash flows from operations, or have future borrowings available under our credit
facilities or from other sources sufficient to enable us to make our debt payments or to fund dividends and other
liquidity needs. We may not be able to refinance any of our debt, including our credit facilities, on commercially
reasonable terms or at all. If we are unable to make payments or refinance our debt, or obtain new financing under
these circumstances, we would have to consider other options, such as selling assets, issuing additional equity or debt,
or negotiating with our lenders to restructure the applicable debt. Our credit agreement and the indentures governing
our senior notes may restrict, or market or business conditions may limit, our ability to do some of these things on
favorable terms or at all.
As of February 23, 2010, Moody’s Investors Service (“Moody’s”), Standard & Poor’s Corporation (“S&P”) and Fitch
Ratings (“Fitch”) had granted Windstream the following senior secured, senior unsecured and corporate credit ratings:
Description Moody’s S&P Fitch
Senior secured credit rating Baa3 BB+ BBB-
Senior unsecured credit rating Ba3 B+ BB+
Corporate credit rating Ba2 BB- BB+
Outlook Stable Stable Negative
Factors that could affect Windstream’s short and long-term credit ratings would include, but are not limited to, a
material decline in the Company’s operating results, increased debt levels relative to operating cash flows resulting
from future acquisitions, increased capital expenditure requirements, or changes to our dividend policy. If
Windstream’s credit ratings were to be downgraded from current levels, the Company may incur higher interest costs
on future borrowings, and the Company’s access to the public capital markets could be adversely affected.
Windstream may be unable to fully realize expected synergies in connection with various recent transactions.
In addition to the recently completed acquisitions of D&E, Lexcom and NuVox, the Company has entered into a
definitive agreement to acquire Iowa Telecom. For more information on these transactions, see “Item 1 – Pending
Acquisitions and Material Acquisitions Completed During The Last Five Years”.
Windstream expects to achieve substantial synergies, cost savings and growth opportunities as a result of such
acquisitions. However, Windstream’s ability to realize the anticipated synergies, cost savings and growth opportunities
will depend upon the successful consummation of pending acquisitions and the integration of the respective businesses
of these companies with that of Windstream. Even if Windstream successfully consummates all of these acquisitions
and integrates these businesses, there can be no assurance that this integration will result in the realization of the full
benefit of the anticipated synergies, cost savings or growth opportunities or that these benefits will be realized within
the expected time frames. Despite Windstream’s efforts to retain quality employees, Windstream might lose some
employees in connection with these acquisitions. Windstream cannot assure you that the combined companies will be
able to attract, retain and integrate employees following these acquisitions. It is possible that the integration process of
the respective acquisitions could result in the diversion of Windstream’s management’s attention, the disruption or
interruption of, or the loss of momentum in, Windstream’s ongoing business or inconsistencies in standards, controls,
procedures and policies, any of which could adversely affect Windstream’s ability to maintain relationships with its
customers and employees or Windstream’s ability to achieve the anticipated benefits of these acquisitions, or could
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