Windstream Board Approves REIT Spinoff, Declares Prorate Cash Dividend
by March 26, 2015 8:20 pm 255 views
Windstream Holdings Inc. announced that the company’s board of directors has given final approval, subject to certain terms and conditions, for the tax-free spinoff of select telecommunications network assets into Communications Sales & Leasing, Inc. (CS&L), the independent publicly traded REIT (real estate investment trust).
In addition, the company’s board of directors declared a prorated cash dividend subject to the closing of the spinoff.
Windstream expects to distribute approximately 80.1% of CS&L shares on April 24, 2015, to Windstream shareholders of record as of 5 p.m. EDT on April 10, 2015. Windstream intends to use the approximately 19.9% retained CS&L shares opportunistically, subject to market conditions, during a 12-month period following the spinoff to reduce debt.
The transaction is expected to reduce more than $4 billion in corporate debt.
“The board’s final approval of this innovative strategic transaction significantly advances our commitment to deliver value for shareholders,” said Tony Thomas, president and CEO of Windstream. “Windstream will be a stronger company with less debt and increased capacity to invest in our network to provide advanced communication services to customers. CS&L will provide an attractive yield to shareholders with the ability to grow and diversify.”
In addition, conditioned on the closing of the spinoff, Windstream will make a cash distribution equivalent to a prorated $.25 quarterly dividend to Windstream shareholders of record as of 5 p.m. EDT on April 10, 2015. Assuming the spinoff closes on April 24, 2015, the cash dividend would be $.0659, and the company would expect to make the payment on April 24, 2015.
Windstream (NASDAQ: WIN) will continue to be listed on NASDAQ, while CS&L is expected to list its common stock on NASDAQ under the symbol “CSAL.”
SHAREHOLDER DISTRIBUTION & DIVIDEND PRACTICE
Upon close of the transaction, Windstream shareholders will retain their Windstream shares and receive one share of CS&L for every five shares of Windstream held.
The spinoff is expected to be a tax-free distribution to Windstream shareholders and requires no action by shareholders. Windstream shareholders will receive cash in lieu of fractional shares for amounts of less than one CS&L share. CS&L expects to pay an annual dividend of $2.40 per share.
Immediately following the distribution of CS&L shares, Windstream will effect a 1-for-6 reverse stock split. Windstream expects to pay an annual dividend of $.60 per share after giving effect to the stock split.