Windstream Holdings' $330M Asset Sale: What You Need To Know

Advanced network communications and technology solutions provider Windstream Holdings Inc WIN said Monday that it sold its legacy EarthLink consumer internet business to Trive Capital for $330 million in cash.

The internet business was acquired by Windstream Holdings in early 2017 as part of the company's merger with EarthLink.

What Happened

The price tag of the transaction implies an estimated EV/sales multiple of two times and EV/EBITDA of four times, Raymond James analyst Frank Louthan IV said in a Wednesday note.

The multiple that Trive Capital paid is higher than what the analyst previously modeled and should better allow Windstream Holdings to focus on its core assets, he said. 

Why It's Important

Windstream Holdings has sold around $390 million worth of assets in the past few weeks, which represents around four times its market cap, Louthan said. This should be sufficient for management to pay all of its near-term financial obligations and put the company on a path toward "significant" delevering, he said. 

What's Next

Windstream's asset sale could result in the company achieving a leverage of less than four times over the next two years, according to Raymond James. Louthan said the company faces another potential catalyst when it reports fourth-quarter earnings or the ongoing Aurelius trial concludes, with the analyst expecting a decision in Windstream's favor.

Raymond James has an Outperform rating on Windstream. 

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