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Fitch downgrade Uniti
Fitch Ratings said it downgraded the issuer default rating assigned to Uniti Group Inc. to B from B+ and placed the company's issuer default rating and security ratings on Rating Watch negative.
The rating action stems from an expected going concern warning from Uniti's auditors, PricewaterhouseCoopers, LLP, resulting from the uncertain impact on the company's financial statements following the bankruptcy filing of Windstream Holdings, its major tenant.
Windstream, rated D, filed for bankruptcy in February following an adverse decision in the bondholder litigation dispute between Windstream and Aurelius Capital Management, Fitch explained.
Per Uniti's credit agreement, the annual financial statements must be delivered within a 90-day period and without a going concern or like qualification, the agency said.
Uniti needs to obtain a waiver in order to not trigger an event of default under this provision, Fitch said.
There is no automatic acceleration triggered by an event of default and it may be waived by lenders holding a majority of the outstanding loans and commitments, the agency noted.
By itself, the Windstream bankruptcy is not an event of default under Uniti's credit agreement or bonds, Fitch said.
The agency said it believes the adverse decision against Windstream introduces some uncertainty regarding Uniti's ability to access the debt and equity markets at reasonable cost.
The company has time to address its nearest maturity, the revolving credit facility that is due in April 2020, Fitch said.
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