Windstream 2006 Annual Report Download - page 66

Windstream Corporation
Form 10-K, Part I
Item 1. Business
THE COMPANY
GENERAL
In this report, Windstream Corporation and its subsidiaries are referred to as “Windstream”, “we”, or “the Company”.
For all periods prior to the effective time of the merger with Valor Communications Group, Inc. (“Valor”) described
herein, references to the Company include Alltel Holding Corp. or the wireline telecommunications division and
related businesses of Alltel Corporation (“Alltel”).
Windstream is a large provider of telecommunications services in rural communities in the United States, and based on
the number of telephone lines we have in service, we are the fifth largest local telephone company in the country.
Windstream owns subsidiaries that provide local, long distance, network access, video services and broadband and
high speed data services in sixteen states. Telecommunications products are warehoused and sold by Windstream’s
distribution subsidiary. A subsidiary also publishes telephone directories for our affiliates and other independent
telephone companies. Windstream is incorporated in the state of Delaware.
The Company’s web site address is www.windstream.com. Windstream files with, or furnishes to, the Securities and
Exchange Commission (the “SEC”) annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports
on Form 8-K, as well as various other information. Windstream makes available free of charge through the Investor
Relations page of its web site its annual reports, quarterly reports and current reports, and all amendments to any of
those reports, as soon as reasonably practicable after providing such reports to the SEC. In addition, on the corporate
governance section of the Investor Relations page of its web site, Windstream makes available the Board of Director’s
Amended and Restated Corporate Governance Board Guidelines and the charters for the Audit, Compensation, and
Governance Committees. Windstream will provide to any stockholder a copy of the Governance Board Guidelines and
the Committee charters, without charge, upon written request to Senior Vice President-Investor Relations, Windstream
Corporation, 4001 Rodney Parham Road, Little Rock, Arkansas 72212.
FORMATION OF WINDSTREAM
On July 17, 2006, Alltel completed the spin-off of its wireline telecommunications business to its stockholders (the
“Distribution”) and the merger of that wireline business (the “Merger”) with Valor. Pursuant to the plan of Distribution
and immediately prior to the effective time of the Merger with Valor described below, Alltel contributed all of the
wireline assets in exchange for: (i) newly issued Company common stock (ii) the payment of a special dividend to
Alltel in an amount of $2.3 billion and (iii) the distribution by the Company to Alltel of certain debt securities (the
“Contribution”). In connection with the Contribution, the Company assumed approximately $261.0 million of long-
term debt that had been issued by the Company’s wireline subsidiaries. Also in connection with the Contribution the
Company borrowed approximately $2.4 billion through a new senior secured credit agreement that was used to fund
the special dividend and pay down a portion of the $261.0 million long-term debt assumed by the Company in the
Contribution. The debt securities issued by the Company to Alltel as part of the Contribution consisted of 8.625 percent
senior notes due 2016 with an aggregate principal amount of $1,746.0 million (the “Company Securities”). These
securities were issued at a discount, and accordingly, at the date of their distribution to Alltel, the Company Securities
had a carrying value of $1,703.2 million (par value of $1,746.0 million less discount of $42.8 million). Following the
Contribution, Alltel distributed 100 percent of the common shares of the Company to its shareholders as a tax-free
dividend. Alltel also exchanged the Company Securities for certain Alltel debt held by certain investment banking
firms. The investment banking firms subsequently sold the Company Securities in the private placement market. On
November 28, 2006, the Company replaced the Company Securities with registered senior unsecured notes in the same
amount with the same maturity.
Immediately after the consummation of the spin-off, the Company merged with and into Valor, with Valor continuing
as the surviving corporation. The resulting company was renamed Windstream. As a result of the merger, all of the
issued and outstanding shares of the Company common stock were converted into the right to receive an aggregate
number of shares of common stock of Valor. Valor issued in the aggregate approximately 403 million shares of its
common stock to Alltel shareholders pursuant to the Merger, or 1.0339267 shares of Valor common stock for each
share of the Company’s common stock outstanding as of the effective date of the Merger. Upon completion of the
Merger, Alltel’s stockholders owned approximately 85 percent of the outstanding equity interests of the surviving
corporation, Windstream, and the stockholders of Valor owned the remaining 15 percent of such equity interests. In
addition, Windstream assumed Valor debt valued at $1,195.6 million.
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