Windstream To Spin Off Some Assets Into Publicly Traded REIT

(RTTNews) - Windstream Corp. (WIN), a provider of advanced network communications, Tuesday announced plans to spin off certain telecommunications network assets into an independent, publicly traded real estate investment trust.

Windstream shareholders will retain their existing shares and receive shares in the REIT commensurate with their Windstream ownership.

The transaction will enable the company to accelerate network investments, provide enhanced services to customers and maximize shareholder value.

The REIT will own Windstream's existing fiber and copper network and other fixed real estate assets.

The deal will allow the REIT to expand its network and diversify its assets through acquisitions.

The tax-free spinoff will enable Windstream to realize significant financial flexibility by lowering debt by $3.2 billion and increasing free cash flow.

As a result of the transaction, Windstream will offer faster broadband speeds and more robust performance to consumers.

The company's board of directors approved the plan after receiving a favorable private letter ruling from the Internal Revenue Service.

"This transaction will make Windstream a more nimble competitor in today's increasingly dynamic communications marketplace and accelerate our deployment of advanced communications services," said Jeff Gardner, president and CEO of Windstream.

Additionally, Gardner expects the REIT to have geographically diverse, high-quality assets and sustainable cash flows with the ability to grow and diversify over time.

The REIT will have approximately 25 employees. Tony Thomas, Windstream's chief financial officer, will become CEO of the REIT. Francis Frantz, a Windstream director, will serve as chairman of the REIT's board.

Windstream plans to maintain its current dividend practice through the close of the transaction.

Following the spinoff, the expected annual dividend per share in the aggregate for the two companies will be $0.70 per current Windstream share, with Windstream expected to pay an annual dividend of $0.10, while the REIT will have an annual dividend equivalent to $0.60.