Fitch Places Windstream on Rating Watch Negative

--Long-term Issuer Default Rating (IDR) 'BB+';

--Secured credit facility 'BBB-';

--Senior unsecured notes 'BB+'.

Subsidiary ratings, as listed at the end of the release, have also been placed on Rating Watch Negative.

The action follows Windstream's definitive agreement to acquire Iowa Telecommunications Services, Inc. (Iowa Telecom) in a transaction valued at approximately $1.1 billion. The Iowa Telecom acquisition, which is expected to close in mid-2010, is one of several transactions recently completed or expected to be completed by mid-2010. Fitch's evaluation will include a review of the risks, costs and timing of the integration process of the transactions, as well as the company's prospective capital structure and financial performance inclusive of expected synergies.

Following the close of the Iowa Telecom transaction in mid-2010, the Nuvox Inc. transaction in the first half of 2010 and the closing of the previously announced acquisitions of D&E Communications Inc. (D&E) and Lexcom, Inc. (Lexcom) in the fourth quarter of 2009, Fitch believes Windstream's 2010 net debt-to-EBITDA is likely to exceed the upper end of the company's 3.2 times (x) to 3.4x historical range until synergies are fully realized.

The Iowa Telecom transaction has a total value of approximately $1.1 billion. Windstream will issue approximately 26.5 million shares with a value of $269 million based on the Nov. 23, 2009 closing price and pay $261 million in cash. The company will also assume estimated net debt of approximately $598 million. Iowa Telecom's EBITDA, pro forma for the acquisition of Sherburne Tele Systems, Inc., was $130 million in the 12 months ending Sept. 30, 2009, and Windstream expects to generate approximately $35 million in operating cost synergies and capital expense savings once the transaction closes.

Windstream expects to finance the Iowa Telecom and Nuvox transactions through cash on hand, as well as an additional debt offering or bank borrowings. Financing for the D&E and Lexcom transactions was completed in September 2009 when Windstream raised approximately $400 million in an offering of unsecured debt.

Concurrent with the unsecured offering, the company extended the maturity of $348 million of the $500 million revolving credit facility from July 2011 to July 2013, with the maturity of the remainder in July 2011. Windstream also amended its senior secured term loan facilities to extend their maturities. The maturity of $168.9 million of the $283 million outstanding on term loan A will be extended from July 2011 to July 2013. The term loan B, which has a $1.368 billion balance outstanding, will have the maturity of approximately $1.078 million extended from July 2013 to December 2015. The amendment and extensions resulted in certain increased fees, including increased interest rates on loans with extended maturities.

Principal financial covenants in the credit facilities require a minimum interest coverage ratio of 2.75x and a maximum leverage ratio of 4.5x. There are limitations on capital spending, and the dividend is limited to the sum of excess free cash flow and net cash equity issuance proceeds subject to pro forma leverage of 4.5x or less.

Windstream's liquidity on Sept. 30, 2009 was strong, given its $290 million in cash on the balance sheet, and approximately $492 million available on its revolver (net of outstanding letters of credit). Other than the portion of the revolver and term loan A facility maturing in 2011, upcoming maturities are nominal through 2012. Liquidity is also supported by free cash flow, which Fitch estimates will be in the $300 million to $350 million range for 2009. Capital spending, per the company's guidance, is expected to range from $290 million to $320 million.

Fitch has also placed following ratings on Rating Watch Negative:

Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance

Corp. (co-issuers):

--IDR 'BB+';

--Senior notes 'BBB-'.

Windstream Georgia Communications

--IDR 'BB+';

--Notes 'BBB-'.

Windstream Holdings of the Midwest

--IDR 'BB+';

--Notes 'BB+'.

Additional information is available at www.fitchratings.com.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Fitch Ratings, Chicago
John Culver, CFA, 312-368-3216
Bill Densmore, 312-368-3125
or
Media Relations:
Cindy Stoller, 212-908-0526, New York
Email: cindy.stoller@fitchratings.com