Windstream Releases Cleansing Materials

LITTLE ROCK, Ark.–(BUSINESS WIRE)– Windstream Holdings, Inc. (the “Company”) today is disclosing certain cleansing materials pursuant to confidentiality agreements (the “Confidentiality Agreements”) entered into among the Company, Uniti Group, Inc. (“Uniti”), and certain holders of the Company’s debt obligations (collectively, the “NDA Parties”) for the purpose of sharing confidential information as part of a mediation process in connection with the Company’s and all of its subsidiaries’ voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the “Mediation”). The parties have reached an impasse with respect to the issues and claims subject to the Mediation, and the mediator has therefore suspended the Mediation indefinitely.

Pursuant to the Confidentiality Agreements, the Company agreed to publicly disclose certain information provided to the NDA Parties (the “Cleansing Materials”). Copies of the Cleansing Materials, including (i) the joint proposal of the Company and the ad hoc group of second lien noteholders dated October 29, 2019, (ii) the proposal of Uniti dated October 18, 2019, and (iii) certain additional Cleansing Materials presented in connection with the Mediation, are available free of charge by visiting the website of Kurtzman Carson Consultants LLC at http://www.kccllc.net/windstream and are also attached to this release. The description of the Cleansing Materials does not purport to be complete and is qualified in its entirety by the complete text of the attached Cleansing Materials.

The information in the Cleansing Materials includes certain projections and forecasts of the Company that is dependent upon assumptions and statements set forth in the Cleansing Materials. Any financial projections or forecasts in the Cleansing Materials were not prepared with a view toward public disclosure or compliance with the published guidelines of the Securities and Exchange Commission (the “SEC”) or the guidelines established by the American Institute of Certified Public Accountants regarding projections or forecasts. The Company’s independent accountants have not examined, or otherwise applied procedures to any projections or forecasts and, accordingly, do not express an opinion or any other form of assurance with respect to any projections or forecasts. The inclusion of the projections or forecasts should not be regarded as an indication that the Company considers the projections to be a reliable prediction of future events, and any projections or forecasts should not be relied upon as such. The Company does not undertake any obligation to publicly update the information contained in the Cleansing Materials to reflect circumstances existing after the date of this release or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the information are shown to be in error.

About Windstream

Windstream Holdings, Inc., a FORTUNE 500 company, is a leading provider of advanced network communications and technology solutions. Windstream provides data networking, core transport, security, unified communications and managed services to mid-market, enterprise and wholesale customers across the U.S. The company also offers broadband, entertainment and security services for consumers and small and medium-sized businesses primarily in rural areas in 18 states. Services are delivered over multiple network platforms including a nationwide IP network, our proprietary cloud core architecture and on a local and long-haul fiber network spanning approximately 150,000 miles. Additional information is available at windstream.com or windstreamenterprise.com. Please visit our newsroom at news.windstream.com or follow us on Twitter at @Windstream.

Cautionary Statement Regarding Forward Looking Statements

This release and the Cleansing Materials may contain “forward looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward looking statements. These statements are based on certain assumptions based on management’s views, estimates, projections, and beliefs as of the time the statements are made, regarding future events and results.. When used in this release and the Cleansing Materials, words such as “will,” “potential,” “believe,” “estimate,” “intend,” “expect,” “may,” “should,” “anticipate,” “could,” “plan,” “predict,” “forecast,” “project,” “profile,” “model,” “strategy,” “future” or their negatives or statements that include these words or other words that convey the uncertainty of future events or outcomes, are intended to identify forward looking statements, although not all forward looking statements contain such identifying words. Forward looking statements involve a number of uncertainties and are subject to many risks and variables that could impact our future performance. Actual future events and our results may differ materially from those expressed in these forward-looking statements as a result of a number of important factors, many of which are beyond our control, including risk factors described in our Annual Report on Form 10-K and First Quarterly Report on Form 10-Q filed in 2019 available at the SEC’s website at www.sec.gov. Although we believe that the expectations reflected in our forward looking statements are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (partially or in full) or will prove to have been correct. In light of these risks, uncertainties and assumptions, the events anticipated by our forward-looking statements may not occur, and, if any of such events do, we may not have correctly anticipated timing or the extent of their impact on our actual results. Accordingly, you should not place any undue reliance on any of our forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

W indstream and Second Lien Ad Hoc Group Proposal

Summary of Settlement Terms
Effective Date	January 1, 2020
Cash Consideration	$525mm
UNIT Common Equity Consideration	Shares equal to 19.99% of Uniti’s current shares outstanding
Fiber TCI Commitment by Uniti	Uniti will fund up to an aggregate of $1,750mm of fiber and fixed wireless tower tenant capital improvements (“TCI”) through April 2030 based on the following commitment schedule Year 1: $175mm; years 2-4: $225mm / year; years 5-10: $150mm / year Any unspent annual TCI commitments will be rolled over into a subsequent year and any unspent TCI commitments through April 2030 will be rolled over into the subsequent renewal period Windstream will pay to Uniti a 1.5% cap rate per year on the average annual cumulative balance of TCIs funded by Uniti1 All investments in fiber assets, including tower investments2 used to deploy fixed wireless, shall be eligible for fiber TCI funding
Summary of Asset Purchase Terms
Cash Consideration	$175mm
Contracts Sold to UNIT	Uniti acquires the following: $21mm of dark fiber IRU EBITDA exclusively on Uniti owned/Windstream leased assets; and Access rights to 1.6mm Uniti-owned Windstream-leased fiber strand miles Consists of 1.3m unutilized fiber strand miles and 0.3m fiber strand miles associated with transferred CLEC dark fiber IRU contracts Uniti will pay Windstream $250 annually per fiber route mile utilized by Uniti, in accordance with normal “Operating & Maintenance” relationships Windstream retains 12 fiber strands beyond what Windstream is utilizing today
MLA Structure	Current MLA to be bifurcated into structurally similar but independent agreements governing the ILEC Facilities and the CLEC Facilities (the “ILEC Arrangement” and the “CLEC Arrangement”, respectively) Certain CLEC copper assets shall be included in the ILEC Arrangement
CLEC Arrangement Structure	Windstream Maintenance Fee: As noted above, Uniti will pay Windstream $250 annually per fiber route mile utilized by Uniti, in accordance with normal “Operating & Maintenance” relationships Windstream Permitted Operations: Windstream shall be permitted to operate in the same manner as it is currently operating concerning utilization of any CLEC fibers Uniti Permitted Operations: Uniti shall be permitted to promote and sell dark fiber solutions so long as such promotion or sale does not occur within a Windstream incumbent local exchange territory
ILEC Competing Business	Competition restrictions on Landlord within Windstream’s ILEC territories and / or adjoining territories remain Language shall be modified to permit the sale of properties and IRU terms in ILEC territories subject to the satisfaction of conditions to be outlined in the ILEC Arrangement
Parties	Windstream Services and its subsidiaries shall be added as tenants / guarantors
Covenants	No financial or operational covenants except as outlined herein
Uniti Transfer / Securitization Rights	The MLA shall be amended to remove all restrictions on Uniti’s transfer rights and other ability to monetize or encumber the MLA, except that Uniti shall not be permitted to transfer its interest to a Windstream Competitor3
Right of First Refusal on WIN Construction of Towers / Small Cells / Fiber Builds	None
General	Thresholds and other relevant provisions of the MLA shall be conformed to the bifurcation of the MLA into the ILEC and CLEC Arrangements and other foregoing terms All terms of modified MLA must satisfy “true lease” analysis, including residual value / economic useful life requirements at end of relevant lease term, fair market value rent for renewal terms, etc.
Conditions Precedent	The parties agree to mutual releases from any and all liability related to all legal claims and causes of action The parties agree that Uniti has no consent rights over Windstream’s business plan, including Windstream’s network deployment strategies

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¹ Such rate shall not be subject to any escalator.

² Exclusive of investments in electronics used to transmit or receive wireless signals.

³ As defined under the current MLA, section 2.1, at page 7.

Uniti Proposal¹

Effective Date	January 1, 2020
Fiber Investment Commitment by UNITI	Aggregate Amount: $1,750mm through April 2030 Annual TCI Schedule: Years 1 – 10: $175mm / year Cap Rate: 8.0% WIN Matching: None TCI Basket: No exclusions of any funded TCI commitments from lease payment calculation upon renewal in 2030
Rent Escalator	Rent escalator remains in place
Upfront Consideration	Cash: $100mm Uniti Stock: None
Exclusion of UOWL CLEC Fiber Rent	Exclusion of Uniti-owned, Windstream-leased (“UOWL”) CLEC Fiber Rent: 2030 renewal rent will exclude the 1.3m fiber strands and the 0.3m fiber strands associated with UOWL CLEC dark fiber contracts
Asset Purchase Terms	Cash Consideration: $150mm Contracts Sold to UNIT: $21mm of dark fiber IRU EBITDA exclusively on Uniti owned/Windstream leased assets transferred to Uniti Windstream relinquishes its rights to access 1.3mm UOWL unlit fiber strands and the 0.3mm fiber strands associated with UOWL CLEC dark fiber contracts

¹ These terms were not endorsed by Uniti; hypothetical proposed terms prepared for discussion.

Additional Cleansing Materials

Significant 1GB Expansion Opportunities within Kinetic Markets

Expansion Opportunities Target Most Economical Markets

			Incremental HH passed
Method	Build Priority	Capital per HH passed (Includes both enablement and success-based capital.)	Fixed Wireless Focused Plan	Aerial Fiber to the Premise Focused Plan
Aerial Fiber to the Premise	On-Going	$520	0.3M	1.1M  (60% Penetration of Opportunity)
Fixed Wireless	2021 & Beyond	$660	1.9M	1.1M
Buried Fiber to the Premise	Not Included in Plan Today	$1,050+	Not In Plan Today  (Buried FttP opportunity to be diligenced in final plan.)	Not In Plan Today  (Buried FttP opportunity to be diligenced in final plan.)

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Spectrum Auction Update

28 Ghz – 1.0M HHs

24 Ghz – 1.4M HHs

Total  – 2.4M HHs

Cost ~ $11/HH

Coverage ~ 52% of HHs

1GB Coverage Areas
	Broadband HH’s	% Aerial FttP Opportunity	% MM Wave Opportunity	Total 1GB Opportunity
AL	38,725	49%	1%	50%
AR	104,724	32%	50%	82%
FL	106,009	7%	0%	7%
GA	686,223	38%	42%	80%
IA	218,965	29%	28%	57%
KY	612,812	71%	17%	88%
MN	22,982	1%	59%	60%
MO	60,678	23%	37%	60%
MS	13,738	4%	0%	4%
NC	408,833	30%	39%	69%
NE	242,957	41%	57%	98%
NM	97,614	53%	30%	83%
NY	100,020	77%	9%	86%
OH	269,574	58%	6%	64%
OK	164,153	31%	0%	31%
PA	351,188	73%	6%	79%
SC	73,949	14%	6%	20%
TX	441,884	39%	32%	71%
Total	4,015,028	46%	27%	73%

 * Currently 73% of WIN Households can be served by combination of Aerial FttP or current Fixed Wireless spectrum in buried plant markets. Current business plan targets 60% coverage utilizing these deployment methods.

Tenant Capital Improvements (Dollars in Millions)
				Fiscal Year Ending 12/31,
				2020		2021		2022		2023		2024		2025		2026		2027		2028		2029		2030
Fixed Wireless Focused Plan
Total Fiber				$ 64		$ 70		$ 47		$ 44		$ 40		$ 36		$ 34		$ 32		$ 30		$ 29		$ 28
Copper				33		23		16		11		8		6		4		3		2		1		1
Other (Buildings, Poles, Conduit)				9		8		7		6		6		5		5		4		4		3		3
Total TCIs				$ 105		$ 101		$ 70		$ 61		$ 53		$ 47		$ 43		$ 39		$ 36		$ 34		$ 31
Fiber To The Prem Focused Plan
Fiber				$ 176		$ 200		$ 186		$ 143		$ 106		$ 93		$ 83		$ 77		$ 70		$ 70		$ 70
Copper				33		23		16		11		8		6		4		3		2		1		1
Other (Buildings, Poles, Conduit)				9		8		7		6		6		5		5		4		4		3		3
Total TCIs				$ 217		$ 230		$ 209		$ 160		$ 120		$ 104		$ 91		$ 84		$ 76		$ 75		$ 74

* Upon additional due diligence, Windstream identified incremental TCIs within its capex budget that would support Uniti’s funding commitment of $1,750mm of fiber and fixed wireless tower TCIs through April 2030.

View source version on businesswire.com: https://www.businesswire.com/news/home/20191112005498/en/

Media Contact:
David Avery, 501-748-5876
david.avery@windstream.com

Investor Contact:
Chris King, 704-319-1025
christopher.c.king@windstream.com

Source: Windstream Holdings, Inc.

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