Windstream Corp. is pricing a 7.75 percent $500 million private placement senior-note bond issue due Oct. 1, 2021 at an issue price of 103.5 percent to yield 7.171 percent, Windstream officials said Monday.
The bond issue is planned to finance a buyback, also announced Monday, of the Arkansas-based telecommunications company’s outstanding 7 percent senior notes due in 2019. The new issue is expected to close Aug. 26.
In a statement released Monday, Fitch Ratings Inc. gave the planned new issue a BB+ rating with a negative rating outlook.
The negative outlook is based on its expectation that Windstream will not be able to bring down its debt to equity ratio as quickly as the telecom company previously predicted despite positive factors, including modest savings still to be generated this year in Windstream’s integration of Paetec Holding Corp., Fitch said.
Moderate pressure on earnings before interest, taxes, depreciation and amortization arising primarily from declines in high-margin inter-carrier compensation revenues, higher spending on enterprise sales initiatives in 2013 and greater competition for consumer voice services would offset Windstream’s expected gains in free cash flow, the ratings agency predicted.
Windstream’s announcement last week that it is weighing formation of a holding company was not a factor in its ratings calculations, Fitch said.
In other news, Windstream said it has named Matt Preschern, formerly vice president of marketing for NA Business Consulting Services at IBM Corp., as its chief enterprise marketing officer.
Windstream shares (Nasdaq: WIN) on Tuesday midday were trading at $8.24, down 10 cents.
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