Windstream 2011 Annual Report Download - page 163

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-55
2022 Notes - On November 22, 2011, we completed the private placement of $500.0 million in aggregate principal amount of
7.500 percent senior unsecured notes due June 1, 2022 at par to yield 7.500 percent (the "2022 Notes"). Proceeds from the
private placement were used to redeem the approximately $201.5 million outstanding of our 2016 Notes at a redemption price
payable in cash that is equal to $1,043 per $1,000 aggregate principal amount. Interest is payable semi-annually.
2023 Notes - On March 16, 2011, we completed the private placement of $600.0 million in aggregate principal amount of 7.500
percent senior unsecured notes due April 1, 2023, at par to yield 7.500 percent (the “2023 Notes”). Proceeds from the private
placement were used to purchase for cash a portion of our outstanding 2016 Notes, including any accrued and unpaid interest
on the tendered 2016 Notes, together with related fees and expenses. Interest is payable semi-annually.
Notes Issued by Subsidiaries
Valor Notes - On February 23, 2011, we retired the Valor Notes, which totaled approximately $426.0 million, including all
accrued and unpaid interest on the Valor Notes and related fees and expenses, using the Additional 2020 Notes, together with
$220.0 million of borrowings on our revolving line of credit. The carrying value as of December 31, 2010 was $406.5 million.
Debt held by Windstream Holdings of the Midwest, Inc., a subsidiary, is secured solely by the assets of the subsidiary.
PAETEC 2015 Notes - In connection with our acquisition of PAETEC on November 30, 2011, we assumed the 9.500 percent
notes due July 15, 2015 ("PAETEC 2015 Notes") with an aggregate principal amount of $300.0 million. Interest is payable
semi-annually.
On January 3, 2012, we retired $150.0 million of the outstanding PAETEC 2015 Notes, in relation to our call for redemption
announced on December 2, 2011. We paid total consideration of $1,048 per $1,000 aggregate principal amount of PAETEC
2015 Notes, plus accrued and unpaid interest to, but excluding, the redemption date. The PAETEC 2015 Notes were purchased
using borrowings on our revolving line of credit.
On February 21, 2012, we retired the remaining $150.0 million outstanding of the PAETEC 2015 Notes, in relation to our call
for redemption announced on January 20, 2012. We paid total consideration of $1,048 per $1,000 aggregate principal amount
of PAETEC 2015 Notes, plus accrued and unpaid interest to, but excluding, the redemption date. The redemption was made
using borrowings on our revolving line of credit.
PAETEC 2017 Notes - In connection with our acquisition of PAETEC on November 30, 2011, we assumed the 8.875 percent
notes due June 30, 2017 ("PAETEC 2017 Notes") with an aggregate principal amount of $650.0 million. Interest is payable
semi-annually.
PAETEC 2018 Notes - In connection with our acquisition of PAETEC on November 30, 2011, we assumed the 9.875 percent
notes due December 1, 2018 ("PAETEC 2018 Notes") with an aggregate principal amount of $450.0 million. Interest is
payable semi-annually.
Certain of our debentures and notes are callable by us at various premiums on early redemption. These debentures and notes
are the 2016 Notes, 2018 Notes, 2019 Notes, 2020 Notes, 2021 Notes, 2022 Notes, 2023 Notes, the PAETEC 2015 Notes, the
PAETEC 2017 Notes and the PAETEC 2018 Notes. Additionally, debt held by Windstream Holdings of the Midwest, Inc. is
callable by us at various premiums on early redemption.
Premium on long-term debt, net of discounts
The premium on long-term debt, net of discounts is primarily due to the debt issuance premium recorded on the debt acquired
in the PAETEC acquisition, partially offset by the net discount recorded on debt discussed above. The premium and discount
balances are amortized over the life of the debt instrument.
Debt Compliance
The terms of the credit facility and indentures, issued by Windstream, include customary covenants that, among other things,
require us to maintain certain financial ratios and restrict our ability to incur additional indebtedness. These financial ratios
include a maximum leverage ratio of 4.5 to 1.0 and a minimum interest coverage ratio of 2.75 to 1.0. In addition, the covenants
include restrictions on dividend and certain other types of payments. The terms of the indentures assumed in connection with
the acquisition of PAETEC, include restrictions on the ability of the subsidiary to incur additional indebtedness, including a