LITTLE ROCK — Little Rock-based telecommunications company Windstream said Tuesday it plans to spin off some of its assets into an independent, publicly traded real estate investment trust, a move the company said would reduce its debt by by about $3.2 billion.
Windstream stated in a news release the spinoff will include Windstream’s existing fiber and copper network and other fixed real estate assets. The REIT will lease use of the assets to Windstream, with an initial estimated rent of $650 million per year.
REITs generally do not have to pay corporate taxes, as long as they distribute at least 90 percent of their taxable income to shareholders annually in the form of dividends.
Windstream said creating the REIT will enable it to accelerate network investments, provide enhanced services to customers and maximize shareholder value.
The REIT is expected to be created in the first quarter of 2015 and employ about 25 people. Windstream shareholders will retain their existing shares and receive shares in the REIT commensurate with their Windstream ownership, the company said.
“This transaction will make Windstream a more nimble competitor in today’s increasingly dynamic communications marketplace and accelerate our deployment of advanced communications services,” said Windstream President and CEO Jeff Gardner. “Additionally, the REIT will have geographically diverse, high-quality assets and sustainable cash flows with the ability to grow and diversify over time.”
Windstream said its board of directors approved the plan after receiving a favorable ruling from the Internal Revenue Service regarding the tax-free nature of the spinoff. Regulatory approval is still needed, the company said.