What happened

Shares of Windstream Holdings (NASDAQ:WIN) briefly rose 10.2% higher on Friday, reaching that peak at 10:40 a.m. EST, before backing down to a smaller 8% gain. The regional telecom appears to be making headway on its plans to refinance its debt balances.

Windstream's logo, black and lime green on white background.

Image source: Windstream Holdings.

So what

Windstream refinanced and restructured its $7.8 billion of long-term debt balances when it spun off what's now known as Uniti (NASDAQ:UNIT) in 2015. The covenant holders behind some of these debt papers have claimed that the Uniti spinout, which separated Windstream's networking assets into a stand-alone business, may have violated the terms of their debt agreements. Windstream is trying to refinance some of these debts again, and the only news this Friday was the postponement of two of these efforts.

Specifically, Windstream is asking its debt holders to waive or amend the default policies on a total of $1.2 billion in senior notes. Importantly, this renewal comes just two days after another extension -- but the latest update does not include extensions on another $1.4 billion of debt exchange offers, so Windstream may have completed that part of its refinancing efforts.

Now what

This is not an easy company to love. Under pressure to settle its Uniti-related finances and other massive long-term debt agreements, the telecom has produced negative free cash flows across the first three quarters of 2017. That leaves no room for the stated goal of lowering Windstream's debt balances. Instead, the refinancing process has only added to the company's debts recently without adding anything to Windstream's cash reserves:

WIN Total Long Term Debt (Quarterly) Chart

WIN Total Long Term Debt (Quarterly) data by YCharts

I don't expect Windstream's story to end well, as the company spun off its most valuable and successful operations into Uniti. Windstream itself was left with few weapons in the battle to stay afloat. If Windstream dodged a bullet in this refinancing effort, there will be more dangers in the road ahead. Share prices have fallen 70% in 2017 for good reason.

Anders Bylund owns shares of Uniti Group Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.