Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

FASB ASC 820, Fair Value Measurements, establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring assets and liabilities at fair values. This hierarchy establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the assessment date;

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 – Unobservable inputs for the asset or liability.

Our financial instruments consist of cash and cash equivalents, accounts and other receivables, our outstanding notes and other debt, settlement payable, interest and dividends payable.

The following table summarizes the fair value of our financial instruments at September 30, 2024 and December 31, 2023:

(Thousands)	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At September 30, 2024
Assets
Derivative asset	$	231	$	—	$	231	$	—
Total	$	231	$	—	$	231	$	—
Liabilities
Senior secured notes - 10.50%, due February 15, 2028 (see Note 10)	$	3,100,886	$	—	$	3,100,886	$	—
Senior secured notes - 4.75%, due April 15, 2028	526,462		—		526,462		—
Senior unsecured notes - 6.50%, due February 15, 2029	974,565		—		974,565		—
Senior unsecured notes - 6.00%, due January 15, 2030	604,480		—		604,480		—
Convertible senior notes - 7.50% due December 1, 2027	345,783		—		345,783		—
ABS Loan Facility, variable rate, due September 1, 2025	273,625		—		273,625		—
Senior secured revolving credit facility, variable rate, due September 24, 2027	4,999		—		4,999		—
Settlement payable	94,465		—		94,465		—
Total	$	5,925,265	$	—	$	5,925,265	$	—

(Thousands)	Total		Quoted Prices in Active Markets (Level 1)		Prices with Other Observable Inputs (Level 2)		Prices with Unobservable Inputs (Level 3)
At December 31, 2023
Liabilities
Senior secured notes - 10.50%, due February 15, 2028	$	2,624,596	$	—	$	2,624,596	$	—
Senior secured notes - 4.75%, due April 15, 2028	488,205		—		488,205		—
Senior unsecured notes - 6.50% , due February 15, 2029	796,125		—		796,125		—
Senior unsecured notes - 6.00%, due January 15, 2030	486,675		—		486,675		—
Exchangeable senior notes - 4.00%, due June 15, 2024	122,140		—		122,140		—
Convertible senior notes - 7.50%, due December 1, 2027	301,755		—		301,755		—
Senior secured revolving credit facility, variable rate, due September 24, 2027	207,979		—		207,979		—
Settlement payable	160,550		—		160,550		—
Total	$	5,188,025	$	—	$	5,188,025	$	—

The carrying value of cash and cash equivalents, accounts and other receivables, and accounts, interest and dividends payable approximate fair values due to the short-term nature of these financial instruments.

The total principal balance of our outstanding notes and other debt was $5.87 billion at September 30, 2024, with a fair value of $5.83 billion. The estimated fair value of our outstanding notes and other debt was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as Level 2 inputs within the fair value hierarchy.

Uniti is required to make $490.1 million of cash payments to Windstream in equal installments over 20 consecutive quarters beginning October 2020 (the “Settlement Payable”). See Note 13. The Settlement Payable was initially recorded at fair value, using the present value of future cash flows. The future cash flows are discounted using discount rate input based on observable market data. Accordingly, we classify inputs used as Level 2 in the fair value hierarchy. As of September 30, 2024, the remaining Settlement Payable is $95.1 million. There have been no changes in the valuation methodologies used since the initial recording.