Morgan Stanley analyst Simon Flannery stated in a note issued prior to Windstream (WIN) confirming that it has filed for Chapter 11 bankruptcy that he sees several potential outcomes for the company's relationship with Uniti Group (UNIT) in the event that Windstream seeks bankruptcy protection. The four potential outcomes he envisions include: the lease is accepted by the court; the lease is rejected; the lease is renegotiated; or the sale and leaseback structure is challenged and the structure collapses back to a single company. In his base case, Flannery is assuming Uniti cuts its annual dividend to 80c from $2.40 and he said Uniti's ability to do additional transactions is now complicated by the Windstream overhang. He maintains an Underweight rating on Uniti shares and cut his price target on the stock to $7 from $16.

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