Windstream Firms Up Balance Sheet by Selling Shrinking EarthLink

(Bloomberg) -- Windstream Holdings Inc. rose 7.7 percent in late trading after selling its EarthLink consumer internet unit to a private equity group for $330 million in cash to shore up its balance sheet.

• The business was sold to Trive Capital, a Dallas-based private equity group led by managing partner Conner Searcy, according to a statement Monday. The EarthLink business offers internet access, online back-up, web design, hosting and various email services to more than 600,000 customers throughout the U.S.

Key Insights

• The sale will provide needed cash for the Little Rock, Arkansas-based carrier, which agreed in July to a $300 million debt exchange with creditors. This month, the company also sold fiber assets in Minnesota and Nebraska for $60.5 million. “We will be a more delevered company over time after selling a declining business,” said Chris King, a Windstream spokesman.
• Windstream paid $1.1 billion for all of EarthLink in February 2017 in a deal that was billed as a way to combine fiber-optic network assets. In the days of dial-up, EarthLink was one of the biggest providers of internet access in the U.S., but that time is long gone. “People paid $5 to $10 a month for email,” King said. “It was not a strategic asset for us.”
• Like other landline providers, Windstream spent heavily to expand geographically and then suffered as the customers shut off their landlines. The company’s long-term borrowings stood at $5.72 billion at the end of the third quarter.
• The company’s $465 million of bonds due in 2023 slipped 0.28 cent Monday to 39.3 cents on the dollar before the deal was announced. The bonds have declined more than 22 cents in 2018 as investors speculated a default was growing likelier.

Get More

• Click here for Windstream’s balance sheet
• Click here for Trive’s website

--With assistance from Brendan Walsh.

To contact the reporter on this story: Rob Golum in Los Angeles at rgolum@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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