Windstream blows past FCC foreign ownership rule to end bankruptcy saga

Windstream will walk away from its Chapter 11 bankruptcy for good following a decision from the Federal Communications Commission to waive a rule that prohibits US telecommunications carriers from having more than 25% ownership by foreign companies. The FCC waiver is the final stamp of approval for Windstream’s plan of reorganization, for which the Bankruptcy Court gave the go-ahead in June 2020. Windstream was forced to file for bankruptcy in 2019 after losing a legal battle with New York hedge fund Aurelius Capital Management over whether the company had defaulted on bonds. As part of the restructuring, Windstream negotiated a proposal with hedge fund manager Elliott International and other investors to buy most of the company’s equity out of bankruptcy, while also removing a large chunk of its debt. At the time the FCC granted a temporary waiver for its foreign ownership rules to enable Windstream’s “prompt emergence from bankruptcy,” but reserved the right to review and rule on the proposed foreign ownership interests following the company’s successful emergence from bankruptcy. Under the proposal, Windstream will have a total foreign equity interest of about 66.29%, according to the FCC’s order. US-based Nexus Aggregator would have a 49.27% interest in the reorganized Windstream. But Elliott International, which is almost entirely owned by a Cayman Islands entity, is not US-based and owns about 69.57% of Nexus. With guidance from the National Telecommunications and Information Administration (NTIA), the FCC said that public interest “would not be served by prohibiting foreign ownership of Windstream, the controlling US parent,” in excess of the usual benchmark of 25%.