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Windstream Holdings Inc. received approval Thursday to transition out of bankruptcy, clearing the way for the company to begin operating as a privately held entity in August.

U.S. Bankruptcy Judge Robert Drain, in a bench ruling, approved a reorganization plan that would allow Windstream to reduce its debt by more than $4 billion annually and begin operating as a private entity owned by its largest creditors.

The judge spent two hours sweeping aside objections from unsecured creditors and ended with a simple, "and I will confirm the plan" statement, giving approval to Windstream to operate independently again.

Windstream has been operating under court-supervised bankruptcy protection for about 16 months.

Now, it can move forward with lower debt and access to $2 billion in new capital that will enhance delivery of high-speed services to its primarily rural footprint, the company said.

"We look forward to beginning this new chapter for Windstream," President and Chief Executive Officer Tony Thomas said after the ruling Thursday afternoon. "When we emerge, our lenders will become our new owners and strategic partners and are aligned with our long-term strategy and mission to deliver quality and reliable services."

Windstream's plan still needs approval from the Federal Communications Commission and several state utility commissions before it can formally exit bankruptcy. Those approvals are expected and Thomas said the company should clear Chapter 11 in August.

Windstream plans to make capital investments of more than $5.7 billion over the next few years, including the $1.75 billion that will be invested by Uniti Group Inc. of Little Rock, court filings show. The Uniti investment is mandated under a settlement agreement between Windstream and Uniti that Judge Drain approved last month.

"The court's confirmation of our plan puts us on a definitive path to emerge from restructuring with a stronger balance sheet and healthy liquidity position to continue making network and software investments for the benefit of our customers," Thomas said in a statement.

Once out of bankruptcy, Windstream will operate as a privately held entity with substantially all of its stock owned by top creditors. The largest ownership group will be Elliott Management Corp., a New York hedge fund.

Elliott would control five of Windstream's 11 board seats, and the chairman of the company would be one of Elliott's appointees, according to court filings.

Windstream has been a publicly traded company since 2006, when it was formed as a spinoff of Alltel Corp.'s wireless properties and a merger with Valor Corp.

"As a private company, Windstream will have increased flexibility to invest in our network, accelerate our transformation and return to growth," Thomas said. "Together, we will emerge from this process as a stronger company able to successfully compete in the communications marketplace."

All outstanding shares of Windstream stock will be cancelled when the company exits bankruptcy. Windstream voluntarily delisted from Nasdaq when it filed for bankruptcy in February 2019. Since then, it has traded as a penny stock.

Under the May settlement, Uniti has agreed to invest up to $1.75 billion through 2030 to improve its network for use by Windstream. Uniti also will pay Windstream about $490 million in cash and purchase fiber assets from Windstream for another $285 million.

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.

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