2 DA 20-675 June 25, 2020 APPLICATIONS FILED FOR THE TRANSFER OF CONTROL OF WINDSTREAM HOLDINGS, INC., DEBTOR-IN-POSSESSION, TO WINDSTREAM HOLDINGS, INC. PLEADING CYCLE ESTABLISHED WC Docket No. 20-151 Comments Due: July 9, 2020 Reply Comments Due: July 16, 2020 By this Public Notice, the Wireline Competition Bureau, International Bureau, and the Wireless Telecommunications Bureau seek comment from interested parties on applications filed by Windstream Holdings, Inc, Debtor-in Possession (Holdings), its subsidiary, Windstream Services, LLC (Windstream), and post-bankruptcy Windstream Holdings, Inc. (New Windstream, and together with Holdings, Applicants), for consent to transfer control of licenses and authorizations held by Windstream and its subsidiaries to effect a transaction under which they will emerge from federal bankruptcy protection (as proposed, the Transaction). See 47 U.S.C. §§ 214, 310(d); 47 CFR §§ 63.04, 63.24; see also Application of Windstream Holdings, Inc., Debtor-in-Possession, Transferor, and Windstream Holdings, Inc., Transferee, for Consent to Transfer of Licenses and Authorizations, WC Docket No. 20-151 (filed May 21, 2020) (Lead Application). The Commission licenses and authorizations subject to the applications are listed in Appendix A hereto and include existing domestic and international section 214 authorizations, millimeter wave licenses, common carrier fixed-microwave licenses, microwave industrial/business pool licenses, and additional miscellaneous wireless licenses. Applicants also filed a petition requesting a temporary and limited waiver Petition for Temporary and Limited Waiver; WC Docket No. 20-151; IB File Nos. ITC-T/C-20200522-00081, ITC-T/C-20200522-00082, ITC-T/C-20200522-00083, ISP-WAV-20200611-00004, ITC-WAV-20200611-00091; ULS File Nos. 0009081087, 0009082139, 0009082351, 0009082392, 0009082434, 0009082528, 0009085568, 0009085592, 0009085614 (dated June 11, 2020) (Waiver Request) (seeking waiver of sections 1.948, 1.2112, 1.5000(a)(1), 63.03, 63.04, 63.18 and 63.24 of the Commission’s rules). of sections 1.948, 1.2112, 1.5000(a)(1), 63.03, 63.04, 63.18, and 63.24 of the rules. 47 CFR §§ 1.948, 1.2112, 1.5000(a)(1), 63.03, 63.04, 63.18, 63.24. Applicants Windstream, a Delaware limited liability company, is a wholly-owned direct subsidiary of Holdings, a Delaware corporation. See Lead Application at Attach. 1, Description of Proposed Transaction and Public Interest Statement (Public Interest Statement), at 2. New Windstream is a new holding company that will be formed to hold newly-issued equity in the existing Windstream or its successor, a similar, newly-formed entity, following its emergence from bankruptcy, with former first lienholders having acquired all the equity in New Windstream. Lead Application at Attach. 2 at 1. Windstream’s operating subsidiaries provide voice, data, and transport services on a local and long-haul fiber network currently spanning approximately 150,000 route miles. Public Interest Statement at 3. Applicants state that Windstream’s consumer and small business segment includes approximately 1.4 million residential and small business customers. Id. In addition, Windstream provides 100 Gbps bandwidth and transport services to wholesale customers, including telecommunications companies, content providers, and cable and other network operators. Id. Windstream’s incumbent local exchange carrier subsidiaries (LEC) serve customers in 18 states, while Windstream’s competitive LEC subsidiaries serve primarily enterprise and government customers in all 50 states and the District of Columbia. Id. Windstream’s incumbent LEC operating subsidiaries provide services in Alabama, Arkansas, Florida, Georgia, Iowa, Kentucky, Minnesota, Mississippi, Missouri, Nebraska, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, and Texas. Lead Application at Attach. 2 at 2. Description of the Transaction On February 25, 2019, Holdings filed voluntary petitions for relief for itself, Windstream, and Windstream’s subsidiaries under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Public Interest Statement at 7-8 (citing Windstream Holdings, Inc., Debtors, Chapter 11, Case No. 19-22312 (Bankr. S.D.N.Y. 2019)). Following the filing of the petitions and the securing of $1 billion in debtor-in-possession financing, Windstream continued to provide service to its customers as it negotiated a comprehensive restructuring plan with its creditors. Public Interest Statement at 7. On April 1, 2020, Holdings filed a plan of reorganization proposing a restructuring, through a two-step transaction, that would allow Holdings, Windstream, and Windstream’s subsidiaries to emerge from bankruptcy “with a deleveraged capital structure and sufficient liquidity to fund the post-emergence business plan.” Id. at 7-8. In “Step One” of the Transaction, the interests held by the existing stockholders of Holdings will be canceled, and the company will be reorganized. Id. The creditors who hold the first lien debt of Windstream will equitize a portion of their debt claims against Holdings and Windstream and receive repayment or replacement loans for the remaining portion. Id. As a result of equitizing their debt and exercising subscription rights and equity commitments in connection with the reorganization plan, the existing holders of first lien debt of Windstream, as a group, will acquire 100% of the equity of New Windstream. Id. As part of the bankruptcy proceeding, Holdings has sought approval from the Bankruptcy Court of a renegotiated agreement among Holdings, Windstream, and Uniti Group Inc. (Uniti) for Windstream’s lease of Uniti’s network assets to support provision of service to Windstream’s customers. Id. at 9. Applicants do not anticipate that any entity would obtain either de jure or de facto control of New Windstream. Id. at 8. The Applicants state that the following U.S.-based entities will hold a 10% or greater equity or voting interest in New Windstream after the completion of Step One: Nexus Aggregator, L.P. (estimated 49.9% voting and equity interest) and Franklin Resources, Inc. (estimated 16.2% voting and equity interest). Lead Application at 5-7; Public Interest Statement at 4-7, Exhs. B, D. Nexus Aggregator, L.P. is an investment fund affiliated with Elliott Management Corporation and its affiliates (collectively Elliott). Lead Application at 5; Public Interest Statement at Exh. C. Applicants list the nine Elliott entities that will have a 10% or greater direct or indirect voting interest in New Windstream following consummation of Step One. Lead Application at 5-7. While Elliott does not provide communications services, it will (pending Commission approval of several transactions) have a disclosable interest in LogMeIn, Inc. (LogMeIn), which has wholly-owned subsidiaries that hold telecommunications authorizations. Id. at Attach. 2 at 2-3; Letter from Christopher W. Savage, Counsel to Windstream Holdings, Inc. and Windstream Services, LLC, Samuel L. Feder, Counsel to Nexus Aggregator L.P., and Meredith S. Senter, Jr., Counsel to the First Lien Debtholders Group, to Marlene H. Dortch, Secretary, FCC (June 12, 2020) (on file in WC Docket No. 20-151) (Applicants’ Supplement Letter). See also Domestic Section 214 Application Filed for the Transfer of Control of LogMeIn, Inc. to Logan Parent, LLC, WC Docket No. 19-396, Public Notice, DA 20-78 (WCB 2020). Funds controlled by four other investment companies and their subsidiaries, some with foreign ownership, will combined hold an estimated 32.1% of the equity and voting interests of New Windstream following consummation of Step One of the Transaction: Pacific Investment Management Company, LLC (PIMCO); Oaktree Capital Group; HBK Capital Management; and Brigade Capital Management, LP. Public Interest Statement at 6-7. Applicants state that none of these entities will individually have a disclosable interest upon completion of the first step of the transaction and that upon completion of the second step, they anticipate that only PIMCO will control an ownership interest of 10% or more. Id. at 6-7. To facilitate Windstream’s prompt emergence from bankruptcy, Applicants request that the Commission approve the present transfer of control applications as part of Step One to permit Windstream to emerge from bankruptcy. Applicants assert that they will emerge with aggregate foreign ownership below the 25% statutory benchmark set forth in section 310(b)(4) of the Act and with no foreign investor holding 10% or more of New Windstream’s stock. Id. at 10-12 (citing 47 U.S.C. § 310(b)(4)). According to Applicants, to achieve the necessary levels of foreign ownership, certain prospective foreign investors would hold upon closing Special Warrants entitling them to obtain indirect equity interests in Windstream, but they could not exercise such Special Warrants until the Commission approves a higher level of foreign investment in “Step Two” of the Transaction. Id at 11. In Step Two, within 30 days of Windstream’s emergence from bankruptcy, Applicants would file a Petition for Declaratory Ruling requesting Commission approval to permit the exercise of the Special Warrants by foreign entities of indirect interests in New Windstream at levels that would require disclosure or specific approval in some cases, and in the aggregate greater than 25%. Id.; Waiver Request at 2, 7-8. Upon emergence from bankruptcy, and pursuant to a grant of the present applications, New Windstream will continue to be Windstream’s parent, and the ultimate parent of Windstream’s operating subsidiaries, and will indirectly hold all licenses and authorizations held by Windstream and its subsidiaries. Public Interest Statement at 10. These changes will not affect the form or organization of any subsidiaries below Windstream. Id. at 3. Statement of Public Interest According to the Applicants, following consummation of this Transaction, Windstream "will move forward with a stable capital structure, uninterrupted service, and an increased capability to compete to bring advanced services to consumers across the country.” Id. at i. The reorganization plan contemplates that the Applicants will secure $3.25 billion in exit financing and aims to reduce the company’s overall debt by approximately 50%, thus deleveraging the company and placing it on a “sound financial footing.” Id. at 8-9. Applicants state that some of LogMeIn’s competitive LEC operations in certain metro areas overlap Windstream’s incumbent LEC service area or parts of its fiber network. Applicants’ Supplement Letter at 2-4. According to Applicants, the Transaction will generate substantial public interest benefits, such as (1) the emergence of Windstream from bankruptcy with substantially less debt and without service disruption to its customers; (2) improved operational and leasing arrangements with Uniti; Also as part of the bankruptcy proceeding, the Applicants renegotiated their agreement with Uniti for Windstream’s continued lease of Uniti’s network assets, the settlement of certain claims, the sale of certain assets, and Uniti’s investment of $1.75 billion in its network to support 1 Gigabit broadband speeds for consumers and small and medium businesses in Windstream’s service areas. According to Applicants, these investments, along with the new capital structure that Windstream will be able to achieve after emergence, would allow New Windstream to expand its 1 Gigabit fiber-based internet service and execute a post-emergence business plan that enhances New Windstream’s competitive position. Id. at 9-10. (3) compensation for the company’s creditors; and (4) increasing competition due to a more stable and solvent Windstream with a stronger capital structure and better access to capital, thus enabling Windstream to improve its broadband service offerings and its enterprise service capabilities, continue its investments in customer service and support, enhance its financial and operational flexibility, and participate in Commission broadband deployment funding auctions. Id. at 14-17. Waiver Request The Applicants seek a temporary and limited waiver of sections 1.948, 1.2112, 1.5000(a)(1), 63.03, 63.04, 63.18, and 63.24 of the Commission’s rules, “to the extent required to expedite initial review and permit the two-step approval process” Waiver Request at 7. proposed in the transfer applications. Id. at 7. Applicants state that similar waivers previously have been granted allowing companies to emerge from bankruptcy using a two-step review and approval process. Id. at 4 (citing Applications Granted for the Transfer of Control of Fusion Connect, Inc., Debtor-in-Possession, and Subsidiaries, Public Notice, 35 FCC Rcd 409, 413 (WCB/IB 2020); Liberman Television of Dallas License LLC, Debtor-in-Possession et al., Order, 34 FCC Rcd 8543, 8551 (MB 2019)). Applicants note that, in Step One, some investors will receive Special Warrants in New Windstream, and some investors, including foreign affiliates of Elliott and Brigade Capital Management, L.P., will own Special Warrants in their own U.S. affiliates. Waiver Request at 1-2. Special Warrants cannot be exercised until subsequent Commission approval in Step Two of the Transaction. Public Interest Statement at 11; Waiver Request at 2. Applicants agree to file, no later than 30 days following emergence from bankruptcy, a Petition for Declaratory Ruling seeking Commission approval to permit exercise of the Special Warrants issued at Step One. Waiver Request at 2. Specifically, the Petition would seek authorization for New Windstream to be up to 100% foreign owned in the aggregate, consistent with the Commission’s rules governing such requests, and would seek specific approval of any foreign investor that would have sufficient post-exercise voting or equity to require such approval. Id. Applicants state that this two-step process would allow New Windstream, Windstream, and their subsidiaries to emerge expeditiously from bankruptcy protection and to avoid the adverse consequences that could result from a delay in implementing the reorganization plan. Id. at 2, 5-6. According to Applicants, operating as a debtor-in-possession imposes significant financial and operational burdens on Windstream, such as a potential need to incur additional indebtedness to maintain liquidity. Id. at 2. Applicants argue that prompt emergence from bankruptcy would allow the company to resume normal operations and would have significant public interest benefits, including providing even greater assurance of continuity of service to customers. Id. at 2. General Information The applications referenced herein have been found, upon initial review, to be acceptable for filing. The Commission reserves the right to return any application if, upon further examination, it is determined to be defective and not in conformance with the Commission’s rules and policies. Interested parties may file comments and petitions on or before July 9, 2020, and reply comments or oppositions to petitions on or before July 16, 2020. Comments may be filed using the Commission’s Electronic Comment Filing System (ECFS) or by paper.  All filings must be addressed to the Commission’s Secretary, Office of the Secretary, Federal Communications Commission.   § Electronic Filers:  Comments may be filed electronically by accessing ECFS at http://apps.fcc.gov/ecfs/. § Paper Filers:  Parties who choose to file by paper must file an original and one copy of each filing.  Paper filings can be sent by commercial overnight courier or by first-class or overnight U.S. Postal Service mail. In response to the COVID-19 pandemic, the Commission has closed its current hand-delivery filing location at FCC Headquarters. We encourage outside parties to take full advantage of the Commission’s electronic filing system. Any party that is unable to meet the filing deadline due to the building closure may request a waiver of the comment or reply comment deadline, to the extent permitted by law. FCC Announces Closure of FCC Headquarters Open Window and Change in Hand-Delivery Filing, Public Notice, DA 20-304 (rel. Mar. 19, 2020), https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy.    § Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701. § U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street, SW, Washington DC  20554.   People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer and Governmental Affairs Bureau at 202-418-0530 (voice), 1-888-835-5322 (tty). In addition, please provide one copy of each pleading to each of the following: (1) Mike Ray or Dennis Johnson, Wireline Competition Bureau, michael.ray@fcc.gov; dennis.johnson@fcc.gov; (2) Kimberly Cook, International Bureau, kimberly.cook@fcc.gov; (3) Linda Ray, Wireless Telecommunications Bureau, linda.ray@fcc.gov; and (4) Jim Bird, Office of the General Counsel, jim.bird@fcc.gov. This proceeding will be treated as a permit-but-disclose proceeding in accordance with the Commission’s ex parte rules. 47 CFR § 1.1200 et seq. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of data or arguments already reflected in the presenter’s written comments, memoranda, or other filings in the proceeding, then the presenter may provide citations to such data or arguments in the prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with section 1.1206(b) of the Commission’s Rules. 47 CFR § 1.1206(b). Participants in this proceeding should familiarize themselves with the Commission’s ex parte rules. To allow the Commission to consider fully all substantive issues regarding the applications in as timely and efficient a manner as possible, petitioners and commenters should raise all issues in their initial filings. New issues may not be raised in responses or replies. See 47 CFR § 1.45(c). A party or interested person seeking to raise a new issue after the pleading cycle has closed must show good cause why it was not possible for it to have raised the issue previously. Submissions after the pleading cycle has closed that seek to raise new issues based on new facts or newly discovered facts should be filed within 15 days after such facts are discovered. Absent such a showing of good cause, any issues not timely raised may be disregarded by the Commission. For further information, please contact Mike Ray, Wireline Competition Bureau, (202) 418-0357; Dennis Johnson, Wireline Competition Bureau, (202) 418-0809; Kimberly Cook, International Bureau, (202) 418-7532; or Linda Ray, Wireless Telecommunications Bureau, (202) 418-0257. - FCC – APPENDIX A SECTION 214 AUTHORIZATIONS A. International File Number Authorization Holder Authorization Number ITC-T/C-20200522-00081 ITC-T/C-20200522-00082 Windstream Services LLC, Debtor-in-Possession A list of those subsidiaries that provide international services under the section 214 authorization held by Windstream Services, LLC also are listed in Attachment 2 to the Lead Application. American Telephone Company ITC-214-19980925-00658 ITC-214-20061201-00539 ITC-T/C-20200522-00083 (Debtor-in-Possession) MassCom Inc., Debtor-in-Possession ITC-214-20080220-00084 B. Domestic A list of the Windstream subsidiaries that provide domestic section 214 service are listed in Attachment 2 to the Lead Application. Applicants do not request streamlined treatment for the transfer of domestic section 214 authorizations. See 47 CFR § 63.03; Lead Application at 10. SECTION 310(d) APPLICATIONS File Number Licensee Lead Call Sign 00009081087 BOB, LLC dba Business Only Broadband WQCC512 0009082139 Windstream Services, LLC, Debtor-In-Possession WQNK758 0009082351 D&E Communications, Inc. WQJH937 0009082392 Windstream D&E Systems Inc. (Debtor-in-Possession) WPNA263 0009082434 MPX INC WPSQ536 0009082528 Oklahoma Windstream, LLC KPP33 0009085568 Valor Telecommunications of Texas, LLC d/b/a Windstream Communications Southwest KKK59 0009085592 Windstream New York Inc (Debtor-In-Possession) WNWM304 0009085614 Windstream NTI, LLC, Debtor In Possession WLN878 WAIVER REQUESTS The Petition for Temporary and Limited Waiver of sections 1.948, 1.2112, 1.5000(a)(1), 63.03, 63.04, 63.18, and 63.24 of the Commission’s rules has been assigned IBFS file numbers ISP-WAV-20200611-00004 and ITC-WAV-20200611-00091, and is available in the following docket and file numbers: · IB File Nos. ITC-T/C-20200522-00081, ITC-T/C-20200522-00082, ITC-T/C-20200522-00083, ISP-WAV-20200611-00004; ITC-WAV-20200611-00091 · ULS File Nos. 0009081087, 0009082139, 0009082351, 0009082392, 0009082434, 0009082528, 0009085568, 0009085592, 0009085614. · WC Docket No. 20-151 5