Day 2 Transcript
Day 2 Transcript
I7OAUSB1ps
6 Plaintiff and
Counterclaim Defendant, New York, N.Y.
7
v. 17 Civ. 7857 (JMF)
8
WINDSTREAM SERVICES, LLC,
9
Defendant, Counterclaim
10 Plaintiff, and
Counterclaim Defendant,
11
v.
12
AURELIUS CAPITAL MASTER, LTD.,
13
Counterclaim Defendant
14 and Counterclaim Plaintiff.
15
-----------------------------------------x
16
July 24, 2018
17 9:30 a.m.
18 Before:
20 District Judge
21 APPEARANCES
1 APPEARANCES CONTINUED
12 (Trial resumed)
22 we proceed?
11 SAUL SOLOMON,
15 DIRECT EXAMINATION
16 BY MR. HOWELL:
21 are mine?
1 likely to stop.
2 Q. Mr. Solomon, I have handed you what has been marked as WIN
5 A. Yes, it is.
11 A. No.
18 and then a Bates number. Does anyone know what the trial
22 minutes ago that the U.S. Bank does not intend to cross-examine
6 Mr. Solomon. This was not a source that Mr. Solomon cited in
10 is there an objection to --
14 agreement.
19 that your Honor may have. As you know, Mr. Solomon offers the
21 make sure that if your Honor had any questions, the Court had
3 had with Mr. Rapport, given the objection, is, I would like to
6 testimony.
12 testimony affidavit.
15 Dr. LaRue, and then U.S. Bank, in my view, opened the door by
19 the burden, would go first, put their case forward, put their
21 And Dr. LaRue, had he simply said, yes the document says what
4 Next.
12 out of it.
16 for the footnote reference that you asked for and give it to
19 (Witness excused)
3 Gunderman.
15 (Pause)
17 Mr. Gunderman has not been sworn in yet. So would you like me
22 ROBERT GUNDERMAN,
4 DIRECT EXAMINATION
5 BY MRS. KARIS:
7 A. Good morning.
10 testimony. I'm going to ask you first to look to the last page
12 page?
13 A. I do.
15 A. Yes.
18 A. Yes.
20 are the statements that you make in there based on your own
21 personal knowledge?
22 A. Yes.
25 A. Yes.
2 your affidavit?
3 A. No.
4 Q. Thank you.
11 Is that correct?
25 CROSS-EXAMINATION
1 BY MR. FRIEDMAN:
6 commission, correct?
7 A. Correct.
9 correct?
10 A. Right.
12 correct?
13 A. Correct.
18 Q. Can you answer my question yes or no? And I'm going to say
22 A. No.
24 the same answer to that question that you did provide when you
1 A. Yes.
3 at page 26. Let me just read the question and the answer. The
4 question asked of you, Mr. Gunderman, was, "So, now, will there
7 correct?
8 A. Yes.
11 subsidiaries, correct?
12 A. Yes.
16 A. Yes.
1 A. Yes.
4 A. Yes.
10 Service Commission.
15 A. Yes.
18 A. Yes.
20 A. Yes.
1 A. Yes.
7 A. Yes.
10 A. Yes.
18 understanding?
19 A. Yes.
21 subsidiaries, correct?
22 A. Correct.
1 A. Yes.
3 A. Yes.
8 A. Yes.
11 A. Yes.
15 A. Yes.
25 sentence that I just read accurately describe the lease and the
2 A. Yes.
7 A. Yes.
10 A. Yes.
13 subsidiaries, correct?
14 A. Yes.
17 "under the terms of the exclusive lease from CSL, the operating
23 A. Yes.
25 what was being provided for in the lease that was being signed
1 by Holdings?
2 A. Yes.
7 correct?
8 A. Yes.
12 A. Yes.
16 correct?
21 A. Yes.
24 A. Yes.
2 A. Yes.
4 that we have on page 26, there was a time subsequently when you
8 it happened.
9 Q. Let me --
11 here because we may need it, but could you also bring up,
12 please, PX 23.
15 see that?
16 A. Yes.
19 oral testimony?
20 A. No.
3 A. Yes.
7 testimony?
8 A. Yes.
9 Q. And before you provided the written responses, did you have
12 Q. And did you consult with attorneys for Windstream about the
19 response.
24 A. Yes.
3 A. Yes.
4 Q. And do you see -- well, the first sentence says, "The value
7 A. Yes.
11 A. Yes.
15 A. Yes.
16 Q. And at the time you provided it, you believed that the
20 A. Yes.
22 testimony, please.
2 A. Yes.
3 Q. And you knew that, in the complaint, the statement that you
6 that?
10 affidavit in this case does not say anything about that sworn
12 correct?
13 A. Correct.
16 A. Correct.
17 Q. And let me just ask you a little bit about that. First of
20 the subsidiaries execute the master lease, quote, was not just
22 A. Yes.
23 Q. And when you say that have Holdings sign the lease rather
2 Is that correct?
3 A. Yes.
5 were. Correct?
6 A. Yes.
8 reasons why Holdings signed the master lease, you say that
11 A. Correct.
17 property?
21 obligations.
24 A. Correct.
25 Q. And you would agree that even though Holdings signed the
3 A. Correct.
7 A. Correct.
10 business, correct?
11 A. Yes.
18 A. Yes.
24 A. Yes.
4 A. Yes.
5 Q. And would you agree that the rent obligations under the
8 "Windstream"?
10 you agree with me that, if the rent payments due to CSL are not
11 made, CSL would have the right under the master lease to take
14 legal conclusion.
1 Q. Would you agree, Mr. Gunderman, that the rights that CSL
2 has under the master lease would effectively enable CSL to put
10 A. Yes.
17 that.
2 BY MR. FRIEDMAN:
10 A. Yes.
12 subsidiaries used their funds for other purposes and did not
17 Q. And in the case of that default, CSL would have the right
19 defaults. Correct?
20 A. Correct.
22 that page.
5 Q. Yes, of course?
11 won't read it again. I think I pretty much read it. I'll give
18 2023 notes?
19 A. Yes.
20 Q. And when you say "we instructed U.S. Bank," who is the
21 "we," please?
4 correct?
5 A. That's my recollection.
8 see that?
9 A. Yes.
10 Q. Is that accurate, that is, U.S. Bank did comply with the
12 mentioned?
13 A. Yes.
15 Bank?
16 A. No.
18 A. Yes.
21 attorneys.
24 A. Yes.
2 A. Yes.
7 Q. You say that Services and U.S. Bank executed the third
9 A. Yes.
22 understood that --
3 lawsuit, correct?
7 is.
16 6, 2017?
17 A. Yes.
19 signature page.
21 the guarantors?
22 A. Yes.
1 Companies?
2 A. Yes.
8 have occurred"?
17 language.
23 A. Yes.
2 Q. I'm just asking if you recall this being the indenture when
6 indenture provision?
8 nonstandard.
13 redirect separately?
19 as you put it, for having Holdings sign the master lease. Was
22 agreement?
9 yes.
11 Redirect.
16 REDIRECT EXAMINATION
17 BY MRS. KARIS:
8 agreements.
9 Q. Now, counsel for the U.S. trustee asked you whether or not
13 questions?
14 A. Yes.
17 all, did the U.S. trustee in fact issue and authenticate this
19 A. Yes.
24 A. Yes.
2 A. Yes.
19 question.
23 what you're trying to get at. I don't think you need to get at
24 it at all.
9 A. Yes.
12 notes?
14 The witness has said that he was not involved in these matters,
22 these notes and what the implications of that were, and whether
3 answer based on your own understanding and not what you were
18 questions?
19 A. Yes.
25 A. Yes.
5 asked about the obligation of the master lease and who the
19 A. Yes.
3 is easier.
5 BY MS. KARIS:
7 A. Yes.
9 recognize --
11 Q. It is on the screen?
12 A. Thank you.
14 A. Yes, I do.
21 A. Yes.
9 customers.
14 stand for?
20 context?
25 BY MS. KARIS:
17 A. Yes.
4 would and did improve the perception from our investors about
6 in our business.
13 covenant.
19 sign the Master Lease? How does that reduce the debt profile
20 of Services?
22 was held. The other benefits, your Honor, that I would see us
5 of companies.
7 BY MS. KARIS:
10 strategic objectives?
23 shareholders.
1 shareholder value?
5 cash flows over time could in fact drive better equity and debt
6 holder value, and the same would be true for the REITs.
8 (Pause)
12 RECROSS-EXAMINATION
13 BY MR. FRIEDMAN:
16 Section 2.10?
18 are on?
10 A. Yes.
14 A. Yes.
17 A. Yes.
1 correct?
8 A. Generally I do.
9 Q. And those easements and things like that, they were no part
11 assets, correct?
16 correct?
17 A. I don't know.
21 correct?
24 after the transfer, CSL owned the assets and had title to the
25 assets, correct?
10 A. Correct.
19 Ms. Karis, that one of the reasons for having Holdings sign the
22 A. I do.
6 A. Yes.
8 page 26? Page 26, with the highlighting. Did I give the wrong
11 you were asked in the Kentucky proceedings when you gave the
15 A. Yes.
18 Kentucky transferor subs and CSL, you were thinking about this
20 A. Yes.
7 Ms. Karis, that one of the benefits of this April 24, 2015
10 A. Yes.
15 A. Yes.
17 could bring that up, Joe, please. And highlight the very
20 with the SEC. And do you see that the line that has been
22 2015 and 2014. Let me ask you this. For the year 2014, we're
24 correct?
25 A. Yes.
4 correct?
5 A. Yes.
8 $300 million?
12 correct?
13 A. Correct.
16 A. Yes.
23 A. Yes.
1 shareholders?
4 correct?
5 A. Yes.
15 A. Correct.
19 A. Correct.
24 A. No.
5 BY MR. FRIEDMAN:
9 A. Correct.
10 Q. And those are assets that had been owned by the transferor
11 subsidiaries, correct?
12 A. Correct.
16 A. Correct.
21 A. Thank you.
24 correct?
25 A. Correct.
3 A. Correct.
8 subsidiaries, yes.
10 subsidiaries, correct?
14 A. Yes.
19 A. Yes.
21 and what that does for the cash flow, don't we have to factor
22 in that part of the cash flow is, starting with the signing of
24 A. Yes.
1 A. Yes.
4 Ms. Karis showed you when she was questioning you, do you know
6 A. I'd have to referred the 8-K, but, you know, we did various
10 transaction.
13 agencies?
14 A. Yes.
22 Q. OK. But let me move into the document to the page that is
24 Priority."
6 A. Yes.
11 Q. And you were showing the rating agencies because the rating
12 agencies rate the bonds and that has an impact on how the
14 A. Yes, correct.
21 understand, correct?
22 A. Correct.
24 agencies, correct?
25 A. Yes.
3 allow it.
7 BY MS. KARIS:
17 because my cross in this area did not in any way go into new
25 page.
5 A. Yes.
16 respectfully disagree.
18 on the computer.
24 BY MS. KARIS:
7 A. Yes.
10 need to be made?
16 adjustments?
18 answer.
21 worth. Go ahead.
22 BY MS. KARIS:
25 A. Yes, I do.
9 adjustments"?
13 Q. And the last column there says "Pro Forma." What is that
20 A. Yes, I do.
1 expenses.
4 Q. Fair enough.
25 increased.
2 A. Yes.
6 A. Yes, it is.
8 transaction?
11 A. Yes.
12 Q. And did it lower the debt more than it lowered the revenue
14 payment?
15 A. Yes.
19 FURTHER RECROSS-EXAMINATION
20 BY MR. FRIEDMAN:
24 you about, you were saying that the pro forma column
1 A. Yes.
4 A. Yes.
5 Q. Now, you would agree with me that when the Master Lease was
8 A. Yes.
11 A. Correct.
14 well, you are not actually free to go. We are going to end
23 Rule 52 motion now as you want but I suspect you have other
25 believe that U.S. Bank has failed to meet its burden of proof
18 (Pause)
24 CROSS-EXAMINATION
25 BY MR. ROBBINS:
2 A. Good morning.
8 used 2 hours and 24 minutes of its time, and Aurelius has not
11 table now?
18 name?
20 (Pause)
24 the record.
3 BY MR. ROBBINS:
7 A. Yes.
12 A. Yes.
13 Q. I believe Ms. Karis asked you about whether you had any
16 A. Yes.
17 Q. May I just ask, sir, how recently have you read the
19 to make?
20 A. This morning.
22 A. Last night.
24 for your testimony, have you not only read the text but
1 declaration?
3 Q. And you were satisfied that the record that is made in the
5 A. Yes.
7 way, sir?
8 A. No.
9 Q. All right. And you knew, when you were doing that review,
12 correct?
13 A. Yes.
14 Q. And you understood that this was a document that was going
17 affidavit, correct?
18 A. Yes.
19 Q. And as you sit here today, you would like the Court to rely
21 A. Yes.
23 your line of work as CFO. You were CFO at the time not only of
24 the sale and leaseback -- I'm sorry, you were the CFO at the
2 A. Yes.
5 A. Yes.
9 A. Yes.
12 A. Yes.
14 lenders, that is, people who are going to buy the company's
17 A. Yes.
19 correct?
20 A. Yes.
24 A. Yes.
7 because they think it's in the best interest of the company may
15 wrong?
16 A. Correct, yes.
21 A. Yes.
1 A. Yes.
8 (Pause)
12 one of the covenants you were satisfied had been met in the
14 A. Yes.
16 A. No.
18 understand I don't want any legal opinion from you or for you
20 enough?
21 A. Yes.
24 quote, fit within the covenants. So, 4.09, read along with me,
25 sir, that basically says, per Section A, that the company shall
3 A. Yes.
4 Q. But then it had -- and you understand, sir, as you sit here
5 today, that if the court concludes that the sale and leaseback
12 A. I don't know.
16 calculation.
17 Q. All right. In any event, you agree with me, sir, that
18 there are then some exceptions that allow the company to exceed
20 exception, correct?
22 Q. I'm sorry. Did you understand, sir, that 4.09, which you
3 A. Yes.
7 A. Yes.
12 A. Yes.
15 you concluded that you had met this covenant, 4.09, one of the
1 me.
7 that, sir?
8 A. Yes.
14 that?
15 A. Yes.
18 know which I mean by that, the ones that closed on or about the
19 6th of November?
20 A. Yes.
22 A. Yes.
1 A. Yes.
5 A. Yes.
9 face amount the total indebtedness of the company went up, did
10 it not?
11 A. Yes.
14 consider the exchanges for the 2021 notes, the 2022 notes, the
15 April 23 notes, but also the 2020 notes, which were in fact
17 A. Correct. There were secured notes issued for the 2020s and
18 21s.
19 Q. If you took the 2020s out because they were -- they were
22 A. Right.
23 Q. If you took those out of the calculation and you just asked
25 look at only the notes that were exchanged into the 6-3/8
1 August 2023s, those would be the 21s, the 22s, and the
3 A. Yes.
6 A. Yes.
7 Q. And as you say, the 2020 notes were exchanged for something
9 A. Yes.
18 October 2020 and 2021 notes, which were the nearest maturities
1 Q. Well, I'm sorry. Did I not ask you that question three
2 minutes ago?
6 2023 notes.
8 A. Yes.
10 A. Yes.
12 testimony incorrect?
18 BY MR. ROBBINS:
19 Q. Mr. Gunderman.
20 (Pause)
23 Q. I'm sorry. Let me just try one more time and then I
2 A. No.
3 Q. Thank you.
9 that the amount of the new debt can't exceed the amount of the
11 A. Yes.
14 you did, that the new notes fit within the covenants. Did you
15 understand that what this basically says is, look, you can
16 exceed the new notes -- the new debt can exceed the old debt to
20 as you did?
23 upon.
5 A. No.
8 me on that.
14 A. Yes.
17 A. Yes.
22 A. Yes, I do.
23 Q. And in paragraph 86, you tell the Court, do you not, that
3 maturities)."
5 A. Yes.
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
4 of the old notes in that, once you adjust for maturity, the
5 longer maturity, and the lower coupon, what the old noteholders
6 got was, in value, the same as what they gave up. Correct?
8 A. Yes.
9 Q. And your point is, if there was an excess over that, which
10 you say there was not, that might be the premium, but you don't
12 A. Correct.
13 Q. And I asked you at your deposition about this, and you also
16 A. Yes.
22 offers." And I asked you if you agreed with that. And you
23 said what?
24 A. Yes.
8 lower coupon note." And, sir, you agree with that too, do you
9 not?
10 A. Yes.
11 Q. All right.
16 Q. And I'm going to change subjects with you, sir, and turn
19 A. Yes.
23 A. Yes.
2 that?
3 A. Yes.
8 A. Yes.
10 not satisfied for some reason, the new notes, the ones that
14 transaction.
18 sir?
21 A. Correct.
25 A. I see it.
2 was something you had labeled, Mr. Gunderman, the "August 2023
4 A. Yes.
7 Correct?
8 A. Yes.
11 A. Yes, I can.
16 A. Yes.
23 Q. I think you can see this with me, Mr. Gunderman. First of
1 A. Yes.
9 A. Yes.
10 Q. And this, sir, this is the language that you had in mind
12 Court what you call the August 2023 notes consent condition.
13 Correct?
14 A. Yes.
17 super bold but underscored with red, Mr. Gunderman, what that
21 outstanding.
22 A. Yes.
2 A. Yes.
3 Q. And you tell the Court, in paragraph 92, that when you made
7 correct?
8 A. Yes.
10 A. Yes.
12 A. Yes.
13 Q. And the other way that you did it was through something you
16 A. Yes.
18 some change to that big thick document I showed you page 520
20 A. Yes.
21 Q. So we've got press releases is one way you tell the world,
22 and then supplemental offering memos are the other way you tell
23 the world. And I want to talk to you about the second way
2 Correct?
3 A. Yes.
11 do their job for you, is, they're supposed to pay, among other
14 Aurelius. Right?
15 A. Yes.
19 counsel during the break and should be back here -- we're going
22 And if folks can just stay seated for one moment so everybody
25 break?
17 allowed.
21 just mention --
23 though?
4 OK with the Court. I would ask Mr. Prieto to step out of the
20 (Recess)
21
22
23
24
25
1 A F T E R N O O N S E S S I O N
2 12:17 p.m.
7 for Aurelius.
9 BY MR. ROBBINS:
11 break that we just took during the last half hour, did you
13 affidavit now?
15 Q. All right. So I was just before the break asking you about
20 A. Yes.
25 A. Yes.
5 A. I see it.
8 million. Correct?
9 A. Yes.
10 Q. And in paragraph 96, you tell the Court that the reason
12 discovered that you did not need as many old notes to exchange
14 position, correct?
17 you determined was that you didn't need as many old notes to
19 position. Correct?
20 A. Yes.
21 Q. All right. And in paragraph 96, you tell the Court that
24 Correct?
25 A. Yes.
4 Correct?
5 A. Yes.
7 notebook.
8 A. 91?
10 exactly, but I think you will find Exhibit 91. And if you
13 A. Yes.
14 Q. Can I ask you, would you agree with me, sir, that it turns
19 A. Yes.
21 A. Yes.
24 A. No.
4 my recollection.
5 Q. All right. But in any event, even if you got the wrong
12 Right?
13 A. Yes.
20 A. AX 135?
21 Q. Yes, sir. Is that it? It's the document that says "first
23 A. Yes.
25 A. Yes.
4 to 282. Right?
5 A. Yes.
8 A. Not yet.
11 A. No.
13 and 96, did you actually look at Exhibit 91, which you cited,
18 the exhibits.
23 A. That's my recollection.
1 A. I see it.
2 Q. And in 97, Mr. Gunderman, one of the things you tell the
5 correct?
6 A. Yes.
7 Q. And you point out that when the company made that
11 A. Yes.
15 Correct?
17 Q. And as you sit here today, Mr. Gunderman, you know, do you
24 you sit here today, do you not, that Global Bondholder Services
2 A. Yes.
4 as best you know, the beneficial holders of the '22s and the
10 supplemental?
13 that --
14 Q. Well, you say you made public announcements. What you mean
17 told us earlier in your affidavit was the second way that you
19 A. Yes.
13 Q. Remember when I showed you page 522 of AX 97, that was the
15 A. Yes.
16 Q. And you told me that this condition means that you've got
20 A. Yes.
23 A. Yes.
24 Q. Now, there was also a 2021 offering memo. Do you see that?
25 A. Yes.
4 A. Yes.
9 see that?
10 A. Yes.
13 we not?
14 A. Yes.
15 Q. Now, you told the Court in your affidavit that you created
17 A. Yes.
20 A. Yes.
1 what you will call the August 2023 condition so that the
4 Correct?
9 Q. I'd be glad to. I asked you, isn't it the case that what
14 memorandum. Correct?
15 A. Yes.
18 A. Correct.
22 A. Yes.
23 Q. But you know as you sit here today, don't you, that the
3 that, please. Here's the language from Exhibit 126, the press
4 release you mentioned. And can we agree that it does not alert
8 providing an answer.
13 supplement?
14 A. And what was the -- I don't have the -- what was the other
15 exhibit?
22 Q. Oh, OK.
25 to adopt?
1 A. Yes.
5 Q. Of course.
5 A. Yes.
8 Q. That language, in 299, you can find that, can you not, sir,
10 A. Yes.
11 Q. And you can find that, can you not, in the '21 offering
12 memo. Correct?
13 A. Yes.
15 A. No.
19 memo and not the second supplement was the only controlling
20 contract for the 2022/2023 notes, would you agree with me, sir,
1 conclusion.
5 A. What date?
9 public documents.
10 Q. They are in fact the existing 6 3/8 notes, are they not?
12 yes.
13 Q. Well, am I right, sir, that unless and until the new notes
14 issued, unless and until the new notes became effective, the
15 only 6 3/8 notes that were outstanding were the ones already
18 that.
20 witness.
23 REDIRECT EXAMINATION
24 BY MRS. KARIS:
2 and the various versions that you were shown. To this day, has
5 those notes?
10 Q. Frequently.
11 A. Frequently.
14 frequently.
19 A. No.
21 A. No.
25 A. Yes.
2 with, indicated that they do not believe that you satisfied the
5 A. No.
8 Q. Fair enough.
12 A. Yes.
15 A. No.
17 can pull up from Exhibit 193 paragraph 109 which you were asked
25 A. Yes.
5 million in October '21, June '22, October '23 notes for 553.7
7 A. Yes.
10 on November 7th of 2017 that has Exhibit No. 82. Do you see
11 that?
12 A. Yes.
15 A. Yes.
18 are talking about, are the amounts that are stated in the
21 A. Yes.
22 Q. Now, you were asked speak by about that 338 million figure.
24 A. Yes.
9 A. Yes.
19 A. Yes.
21 just looking at is talking about the 2020 and 2021 notes for
22 338. Correct?
23 A. Yes.
24 Q. Under 2021, what does this say about the amount that was --
25 I'm sorry. Let's pull it up. The first sentence under "2021
1 exchange offer."
14 Q. OK. And under the 2020 -- and you don't have to read it
15 into the record -- the document speaks for itself -- but just
16 tell us, what is the dollar figure of 2020 notes that were
18 A. 2021 or 2020s?
19 Q. 2020s.
20 A. 2020s. 157,970,000.
22 179.8 and 157.9, that that comes out to 338, which is the
24 A. Yes.
2 record.
4 exchanged approximately."
6 math.
9 A. Yes.
16 BY MRS. KARIS:
22 corrected.
23 A. Yes.
4 there, the first sentence, does this press release announce the
6 282 million?
7 A. Yes.
8 Q. Mr. Gunderman, let me ask you this. How would you describe
11 A. Very sophisticated.
15 A. Yes.
21 investors.
24 exchange?
25 A. Yes.
6 Joe, please.
7 RECROSS EXAMINATION
8 BY MR. ROBBINS:
10 with WIN 132, the November 7th press release, that that had --
12 paragraph 109 was correct after all. Was that your testimony?
18 sentence? Correct?
20 Q. Right. And the press release that Ms. Karis showed you
22 wouldn't it?
23 A. Yes.
1 A. Yes.
5 A. Yes.
7 release WIN 125, the October 25th, 2017 press release, and
8 showed you, did she not, that it announced that the issuance
9 condition, from 587 to, I guess, 282, that was told to these
16 A. Yes.
18
19
20
21
22
23
24
25
3 the language that you tried to change for the August 2023
4 condition, correct?
6 intention.
7 MR. ROBBINS: I'm sorry. Can we, Joe, put back up the
8 three comparators.
10 A. Yes.
11 Q. This was your -- the company was trying to copy the version
13 right or wrong?
14 A. Right.
17 anything in WIN 125 that Ms. Karis showed you that would alert
21 anything?
22 A. No.
2 (Witness excused)
9 the break I would like him to step out while I just alert the
11 Kirkland to.
17 (Pause)
7 hear us.
10 Carry on.
20 their notes, when they acquired their notes, what their beliefs
4 again today.
15 proposals.
23 ground.
14 the notes and whether and to what extent that valuation was
19 relevant for that reason because they were not made during
20 discovery.
2 at best a form of anemic cross for this expert when she takes
3 the stand, and she will be ready to answer that line of anemic
13 it were relevant --
14 THE COURT: You are not calling Mr. Godfrey the devil
15 but --
21 about that, of Dr. Sabry, she is here, she is in court, she can
22 answer those questions, and she will. But for purposes of this
25 that has become any more relevant today than it was back in
8 as, say, July or what have you, that that would affect the
13 that there was no premium, and you may well be right about
15 record, and then I will decide all those things in due course.
16 But why not let them at least inquire briefly of that, and then
20 that?
22 First and foremost, that isn't why they want to do this stuff.
23 They want to do this for the same reason they were trying to
6 expert opinion, does that change the calculus? And I think the
9 that Aurelius does own CDS positions, and she can answer that
14 isn't doesn't change the fact that her opinion did not take
15 account of that.
21 questions and see what answers they get. But I don't think it
22 renders this witness' answers any more relevant than they were
1 privilege issues.
7 that you veer anywhere close to that territory, that you can
8 make clear that your question, you are not asking for him to
13 So if you have any doubt about that, raise your hand and I'll
15 How is that?
10 go into those.
17 to make it.
23 me, number one, why, to the extent that you are now arguing
5 and mindful that she wasn't given the trading positions and
9 Mr. Robbins opened the door -- in fact, he didn't just open the
10 door, he blew the hinges off the door. He asked the witness,
21 Aurelius the purpose for which they -- the reason for why they
23 Secondly --
25 second argument?
10 the notes subject to that, because if they did not, they lack
13 to complain about.
15 you can ask about whether they knew of the second supplemental
16 exchange.
20 the --
25 that that shows that they thought the exchange was worthwhile
3 playing.
15 the way, he lays out in his affidavit and it is laid out in the
22 knew, etc., etc., except for we believe -- and Dr. Kan is going
2 but-for world that one is analyzing, one does not have the
20 the Court.
2 am going to get into this with Mr. Prieto, are that a premium
6 their complaint long after the pleadings are due and reverse
7 course, and I will get into that with the witness on the
8 witness stand.
13 Yes.
18 said, well, yeah, but I am going to stay away from 408 uses of
24 157?
11 that.
12 So, the notion that Rule 408 sets the boundaries here
6 is welcome to ask, you know, does this letter say what it says,
7 fine. But I don't think that's where we are going to end up.
9 what settlements did you have in mind, Mr. Prieto, what were
10 you thinking, what did you propose, what did you tell your
12 going to go. I hope I'm wrong, but I suspect not, because what
21 Mr. Godfrey himself, you've laid down your marker and he has
22 heard you and I have heard you, so I will be attuned to it, but
5 Mr. Robbins wants the broadness far beyond that and we will
8 well.
12 time.
14 Honor.
17 (Pause)
19 stand, please.
22 DENNIS PRIETO,
1 And would you please state and spell your name for the
2 record.
7 DIRECT EXAMINATION
8 BY MR. ROBBINS:
16 A. I do.
18 A. It is my affidavit.
20 A. Yes.
23 A. I have.
25 make?
4 reference to AX299.
5 Q. OK. Other than that, any other changes you wish to make?
6 A. No.
8 accurate?
9 A. Yes.
11 affidavit?
12 A. Yes.
25 sentence is stricken.
7 cross-examination.
9 evidence)
16 CROSS-EXAMINATION
17 BY MR. GODFREY:
19 A. Good afternoon.
21 your affidavit, which has been marked and entered into evidence
23 A. I am there.
2 A. Correct.
5 A. Yes.
10 understanding?
16 understanding?
24 BY MR. GODFREY:
1 you, Aurelius?
2 A. Yes.
4 A. Yes.
5 Q. But say you did not get the second supplemental memorandum,
6 right?
7 A. Correct.
15 A. Yes.
16 Q. Now, you read press releases when they came out, correct,
17 from Windstream?
20 MR. GODFREY: Mr. Hehn, could you put that up, please.
23 A. I do.
4 A. Yes.
6 the page -- if you can enlarge that, Mr. Hehn, please -- and it
9 see that?
10 A. Yes.
12 A. I don't recall.
18 being made?
21 A. I do.
23 A. Yes.
1 paying 110 percent attention all the time on what was taking
8 August 2023 notes during this time period, that is, October 18,
11 Q. And at no point during that time did you pick up the phone
17 recall.
19 never did it, right? They never once picked up the phone,
3 A. Yes.
4 Q. OK. Did you own those notes during the exchange period,
5 that is, from October 18, 2017, to November the 7th, 2017?
6 A. Yes.
8 those series, the 2020, 2021 and 2022, or they were lumped
15 THE COURT: OK. And that's between August 3rd and the
16 end of November?
21 BY MR. GODFREY:
22 Q. Did you also own April 2023 notes, that is, you, Aurelius,
23 from August 3rd through the end of 2017 during that time
24 period?
6 offering memos?
8 of questions.
14 more time.
15 BY MR. GODFREY:
16 Q. With respect to the April 2023 notes, did you ever ask any
25 BY MR. GODFREY:
3 not asking for whether you have a legal opinion about it.
6 lawyers.
8 communications that you had with your lawyers, but you can
9 answer what your own understanding is. Whether you will then
14 A. I don't recall.
15 BY MR. GODFREY:
24 privilege.
1 A. I understand.
6 in this case?
7 A. Yes.
10 A. Yes.
13 right?
17 identification.
20 A. Yes.
1 dropped?
5 178?
6 A. I don't recall.
7 Q. You don't know one way or the other. All right, then we'll
8 move on.
11 You are familiar with the Indenture, are you not, sir?
12 A. Yes.
1 transaction?
2 A. Yes.
3 Q. But you also agree, do you not, that unless the Court finds
6 4.09(a), correct?
13 I give counsel Exhibit 168, a copy for the Court and one for
14 you.
23 Windstream Services?
24 A. Yes.
5 A. Yes.
7 A. "Admitted."
18 carefully, and the moment they were announced, you were aware
21 A. Yes.
7 A. Yes.
13 have less than 50 percent of the new notes plus the old notes.
17 take effect?
18 A. No.
24 Q. Let's see what you said. Let's turn to Tab 14 of the white
2 13, 14 and 15, Windstream Exhibits 155, 156 and 157. So let's
5 before, sir?
6 A. Yes.
13 did.
17 A. Yes.
19 sent -- that you, Aurelius, sent this letter, dated October the
23 to any bondholders.
6 A. Yes.
7 Q. And in this letter, among other things, you tell the other
9 let's -- if you can go down, Mr. Hehn, I will make this easier.
11 that.
25 infirmities, right?
1 A. Yes.
12 A. Yes.
14 issuance?
15 A. Yes.
17
18
19
20
21
22
23
24
25
8 Q. But you are aware that Aurelius was sending out Exhibit 155
9 on October 30th.
10 A. Yes.
20 notes that were being issued in the exchange offer would have
7 2017. Correct?
8 A. Yes.
9 Q. Now, there are 12 days between the 18th of October and the
14 solicitations?
18 so.
20 notice of the docket and what and isn't on it. There obviously
22 think you can make that argument. You don't need to inquire of
9 document?
10 A. Yes.
15 paragraph, please.
1 that it?
4 Q. All right. And did U.S. Bank follow your direction, that
6 A. No.
12 A. Yes.
16 A. Yes.
21 A. Yes.
1 us?
2 A. Yes.
5 A. I don't recall.
8 basically?
9 A. I don't recall.
12 A. Yes.
15 A. Yes.
16 Q. And they were the lawyers for Aurelius; is that not the
17 case?
25 (Record read)
1 A. It appears to be so.
2 Q. Well, after November the 5th, 2017, do you recall when the
6 supplemental indenture?
13 consent solicitations.
14 A. Yes.
23 Q. By the way, Aurelius has never sued U.S. Bank for failing
25 A. Correct.
1 Q. Now, do you recall when the first time it was, the date,
5 A. No.
7 ring a bell?
12 Indenture," sir?
13 A. Yes.
4 A. Yes.
11 like me to.
24 I --
1 read it together.
3 paragraph enlarged.
18 November the 17th, 2017, the sum total of what Aurelius did to
23 right?
9 A. Yes.
12 A. Yes.
20 A. Yes. Yes.
23 over Section 4.09, Section 4.12, or Section 4.17, which are the
25 A. I don't recall.
11 canceled?
18 voted to consent?
25 notes.
1 Q. Do you know when the August 2023 new notes started trading?
2 A. No.
4 authentication.
9 A. I have no idea.
11 2023?
18 A. Yes.
20 Exhibit 1. I think you have it before you. And can you please
24 A. Almost. OK.
1 not?
6 Section 2.02?
18 A. Yes.
2 another purchaser?
3 A. No.
4 Q. No understanding.
5 A. No.
8 Aurelius?
10 your Honor.
16 fiduciary.
18 Mr. Prieto, the understanding that you are not being asked for
22 Aurelius?
2 A. Yes.
7 A. Sounds familiar.
10 canceled. Right?
11 A. Yes.
18 sustained.
23 Aurelius ever buy or trade a note which has been declared void
24 or invalid?
11 BY MR. GODFREY:
14 A. Yes.
17 claims it's making, other than the September 21st, 2017 notice
18 of default?
20 at some point.
22 that, sir?
23 A. Yes.
25 A. Yes.
4 A. Yes.
7 please.
9 A. I do.
17 that the new notes cannot constitute additional notes, but then
21 of 4.09, 4.17," and there are some other bullet points here.
1 A. Yes.
4 A. Yes.
9 A. I see it.
13 MR. GODFREY: Mr. Hehn, can you enlarge the third full
14 paragraph, please.
15 Q. Could you read, Mr. Prieto, the first sentence of the third
2 (Record read)
3 A. Yes.
7 A. Yes.
9 sir?
11 Section 6.06 --
12 Q. Correct.
19 A. "A holder of a note may not pursue any remedy with respect
16 A. Yes, please.
18 (Record read)
24 A. No.
3 Q. Yes --
7 consent solicitations, the new August 2023 notes, and the third
8 supplemental indenture.
14 A. Yes.
20 A. As of what date?
21 Q. September 7th.
2 A. Yes.
3 Q. Now, you were here in the courtroom this morning, were you
4 not, when Mr. Robbins was asking Mr. Gunderman some questions
7 A. Yes.
8 Q. Isn't it true, sir, that Aurelius did not buy $189 million
15 A. I don't recall.
21 A. Yes.
23 '17, 2017?
2 A. Correct.
6 A. Yes.
10 indenture.
12 A. Yes.
17 You have it in front of you. And how much more did Windstream
22 Q. Close enough.
1 A. Yes.
10 A. Yes.
14 A. Sorry. I don't see the number. Oh. Got it. I see it.
20 A. No.
21 Q. Let's change topics. Have you ever met with someone named
23 A. Yes.
3 A. Yes.
4 Q. How many?
12 you not?
13 A. Yes.
15 A. Correct.
20 A. Well, when you say Dr. Sabry, I think at one point her team
21 asked if we can send them some cell site reports that were
22 issued on Windstream.
23 Q. By the way, have you met separately with Dr. Sabry's team
25 A. No.
1 Q. Did Dr. Sabry ask you and Aurelius to provide her, so that
2 she could prepare her opinion and report in this case, with the
5 A. Not directly.
12 Honor.
14 THE COURT: You can ask you can ask Dr. Sabry. So
23 Q. Now, during the time, sir, that you were sending out these
25 and 15, Exhibits 155, 156, 157, did you ever tell fellow
3 A. No.
6 period?
7 A. No.
9 minutes.
11 Honor, I think.
13 to your knowledge?
15 this lawsuit.
17 two entities.
20 A. Yes.
22 who?
24 Q. Friedman Kaplan?
5 A. Yes.
21 (Counsel confer)
23 your Honor.
25 attachment?
3 A. I think the --
5 Q. That's you.
9 A. Yes.
11 A. Yes.
15 Q. Can you read that first full paragraph from the Kramer
25 A. Yes.
3 A. Yes.
6 nominal amounts of the 2021, 2022, and April 2023 notes. Did
14 A. No.
17 REDIRECT EXAMINATION
18 BY MR. ROBBINS:
25 there.
1 A. I have it.
8 the terms." Do you see that? And could you just highlight
11 A. Yes.
14 that?
15 A. Yes.
21 changed?
24 that Mr. Godfrey drew your attention to. And my question is,
3 Q. Let me direct your attention -- you can put that one away.
7 document in the lower right. And you were asked some questions
10 A. Yes.
12 could. And it's the one that begins towards the bottom of the
15 just lift up the page a little bit because I don't think that's
18 Q. But in any event, just do you see the "the company may"?
20 A. Yes.
23 law."
5 communications of counsel?
15 A. Yes.
19 that is in Section 1.04, and it begins "to the extent" and goes
21 sir?
22 A. Yes.
24 do you happen to know how this language got into the third
25 supplemental indenture?
6 A. Yes.
12 binder.
15 hard copy.
19 A. Yes.
22 A. Yes.
25 A. Yes.
3 A. Yes.
4 Q. Who is he?
6 this matter.
7 Q. He is forwarding --
13 recall.
22 (Witness excused)
1 Is that correct?
7 you guys anticipate the crosses of the two experts, or for that
13 has made.
20 planning purposes.
21 Anything else?
5 second.
8 if you could just clear the tables or push your things to the
9 side at least, that would be great. And I'll see you tomorrow
10 morning.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1 INDEX OF EXAMINATION
3 SAUL SOLOMON
5 ROBERT GUNDERMAN
15 DENNIS PRIETO
19 DEFENDANT EXHIBITS
22 189 . . . . . . . . . . . . . . . . . . . . 241
23 193 . . . . . . . . . . . . . . . . . . . . 246
24 AX 318 . . . . . . . . . . . . . . . . . . 367
25