Windstream 2015 Annual Report Download - page 194

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-64
5. Long-term Debt and Lease Obligations, Continued:
Debentures and Notes Repaid in 2015
Partial Repurchase of Senior Notes - In August 2015, Windstream Services’ board of directors authorized a debt repurchase program
pursuant to which Windstream Services may purchase or redeem up to $300.0 million of any of its unsecured notes through one
or more open market purchase offers, tender offers, privately negotiated transactions, or other purchase transactions, with the
amount of such purchases funded by either borrowings under the revolving line of credit, new term loans under the senior secured
credit facility, or a combination thereof. On December 17, 2015, Windstream Services’ board of directors increased the capacity
of the debt repurchase program authorizing Windstream Services to repurchase up to an additional $200.0 million of its unsecured
notes. During the third and fourth quarters of 2015, Windstream Services repurchased in the open market $299.5 million aggregate
principal amount of its senior unsecured notes consisting of the following:
• $195.9 million aggregate principal amount of 7.875 percent senior unsecured notes due November 1, 2017, (the “2017
Notes) at a repurchase price of $209.6 million, including accrued and unpaid interest;
• $29.6 million aggregate principal amount of 7.750 percent senior unsecured notes due October 1, 2021, (the “2021 Notes),
at a repurchase price of $25.8 million, including accrued and unpaid interest;
• $14.1 million aggregate principal amount of 7.500 percent senior unsecured notes due June 1, 2022, (the “2022 Notes),
at a repurchase price of $11.5 million, including accrued and unpaid interest; and
• $59.9 million aggregate principal amount of 7.500 percent senior unsecured notes due April 1, 2023, (the “2023 Notes)
at a repurchase price of $50.2 million, including accrued and unpaid interest.
At the time of repurchase, there was $3.9 million in unamortized net discount and debt issuance costs related to the repurchased
notes. The repurchases were funded utilizing available borrowings under the amended revolving line of credit.
2018 Notes - On May 27, 2015, Windstream Services redeemed all of its $400.0 million aggregate principal amount of 8.125
percent senior unsecured notes due September 1, 2018 (the “2018 Notes”), at a redemption price payable in cash equal to $1,040.63
per $1,000 principal amount of the notes, plus accrued and unpaid interest. At the time of redemption, there was 1.4 million and
$4.0 million in unamortized discount and debt issuance costs, respectively, related to the 2018 Notes.
PAETEC 2018 Notes - On May 27, 2015, PAETEC Holding, LLC (“PAETEC”), a direct, wholly-owned subsidiary of Windstream
Services, redeemed all $450.0 million of the outstanding aggregate principal amount of 9.875 percent notes due 2018 (the “PAETEC
2018 Notes”), at a redemption price payable in cash equal to $1,049.38 per $1,000 principal amount of the notes, plus accrued
and unpaid interest. At the time of redemption, there was $16.9 million in unamortized premium related to the PAETEC 2018
Notes.
Windstream used a portion of the $1.035 billion cash payment received from CS&L in conjunction with the spin-off of certain
telecommunication network assets to redeem these two debt obligations (see Note 3).
Cinergy Communications Company - On April 24, 2015, Windstream Services repaid all $1.9 million of the outstanding aggregate
principal amount of these unsecured notes utilizing available borrowings under the amended revolving line of credit.
Windstream Services may call certain debentures and notes at various premiums on early redemption. These debentures and notes
consist of $700.0 million in aggregate principal amount of 7.750 percent senior notes due October 15, 2020, the remaining aggregate
principal amounts due related to the 2021, 2022, and 2023 Notes and $700.0 million in aggregate principal amount of 6.375 percent
senior notes due August 1, 2023. In addition, Windstream Services may call debt issued by Windstream Holdings of the Midwest,
Inc. at various premiums upon early redemption.
Debt Compliance
The terms of Windstream Services’ credit facility and indentures include customary covenants that, among other things, require
maintenance of certain financial ratios and restrict Windstream Services’ 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. As of December 31, 2015, Windstream Services was in
compliance with all of these covenants.