Windstream 2015 Annual Report Download - page 154

F-24
Debt and Dividend Capacity
Windstream Holdings has no debt obligations. All of our debt, including the facility described below, has been incurred by our
subsidiaries (primarily Windstream Services). Windstream Holdings is neither a guarantor of nor subject to the restrictive covenants
imposed by such debt.
As of December 31, 2015, we had $5,170.5 million in long-term debt outstanding, including current maturities (see Note 5). As
of December 31, 2015, the amount available for borrowing under Windstream Services’ revolving line of credit was $926.9 million.
As a result of the debt-for-debt exchange, completion of the long-term debt tender offers, and other repayments, Windstream
Services decreased its long-term debt outstanding by approximately $3.5 billion. As of the spin-off date, Windstream retained a
passive ownership interest of approximately 19.6 percent of the common stock of CS&L. Windstream intends to use all of its
shares of CS&L to retire additional Windstream Services debt within 18 to 24 months from the date of the spin-off, subject to
market conditions. In conjunction with the spin-off, on April 24, 2015, Windstream Services amended its senior secured credit
facility to extend the maturity of its revolving credit facility to April 24, 2020. Otherwise, the borrowing capacity under the amended
revolving credit agreement was unchanged and provides for borrowings up to an aggregate principal amount of $1,250.0 million.
As of December 31, 2015, Windstream Services had approximately $676.1 million of restricted payment capacity as governed by
its senior secured credit facility. Following the completion of the spin-off and amendment of the credit facility on April 24, 2015,
Windstream Services’ credit agreement was amended to (i) reset the restricted payment capacity to $750 million and (ii) among
other things, exclude the master lease payment as a future restricted payment. The restricted payment capacity may limit the
amount of dividends Windstream Services may distribute to Windstream Holdings to fund future dividend payments to Windstream
Holdings’ shareholders. Under terms of the credit facility, payments required under the master lease are deducted from OIBDA.
Windstream Services builds additional capacity through cash generated from operations while dividend distributions to Windstream
Holdings, and other certain restricted investments reduce the available restricted payments capacity. Windstream Services will
continue to consider free cash flow accretive initiatives.
Debt Covenants and Amendments
The terms of the credit facility and indentures issued by Windstream Services include customary covenants that, among other
things, require Windstream Services to maintain certain financial ratios and restrict its 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.
Certain of Windstream Services’ debt agreements contain various covenants and restrictions specific to the subsidiary that is the
legal counterparty to the agreement. Under its long-term debt agreements, acceleration of principal payments would occur upon
payment default, violation of debt covenants not cured within 30 days, a change in control including a person or group obtaining
50 percent or more of Windstream Services’ outstanding voting stock, or breach of certain other conditions set forth in the borrowing
agreements. At December 31, 2015, Windstream Services was in compliance with all debt covenants and restrictions.