GCX terminated its sale process and laid down its intent to emerge from bankruptcy as an independent entity through a ‘plan of reorganisation’. Under the terms of the proposed plan, which was first announced on 15 September 2019 with support from more than 75% of the company's lenders, GCX will also reduce debt by $150 million and access new working capital.
“While we had a responsibility to evaluate all potential opportunities, we at GCX are thrilled to move forward as an independent company supported by a group of existing lenders that believe in our team and the opportunities ahead of us,” said Bill Barney, chairman and CEO of GCX (pictured).
“We are confident this ownership structure – and the additional financial strength it provides – will allow us to continue to honour our commitments to employees, customers and suppliers, build upon our strategic plan and emerge as an even stronger company.”
The news comes after Barney stepped down in September from his job as CEO of troubled Indian operator Reliance Communications (RCom), so that he has focus on his other task, as head of RCom subsidiary GCX.
A statement from both companies said at the time that Barney will “focus full time at the helm of GCX during its corporate restructuring process”. The process took a new turn a week prior to this when GCX filed for Chapter 11 bankruptcy protection in the US.
Commenting on his role, Barney said: “It has been an honour to be entrusted with the leadership of RCom over the past three years. With GCX’s recent voluntary Chapter 11 filing, it will be in the best interest of both RCom and GCX for me to step down at this time to focus on GCX restructuring. Upon emergence from this process, GCX expects to be well-positioned to aggressively pursue our business plan independent of the overhang caused by our corporate parent’s challenges.”
Legally GCX remains a subsidiary of RCom, but RCom has lost all power and influence over it. The Chapter 11 filing of the US Bankruptcy Code effectively cedes control to GCX’s creditors, which were looking for at least $366 million for the company.
But at the same time GCX had put itself up for sale to a private equity or industry buyer – perhaps one prepared to pay more, even as much as the $1.1 billion that, Capacity understands, was being discussed by potential buyers a year ago.
However, the company has now terminated the sales process and decided that the best way to maximise value and position its businesses for long-term growth and success is through a standalone plan of reorganisation.
The decision to move forward as a standalone company was backed by the strong ownership of its senior secured noteholders and a hearing to gain the Court’s confirmation for the standalone plan is scheduled for 4 December 2019.
The company expects to emerge from its Chapter 11 restructuring shortly thereafter. GCX is being advised in its restructuring by Lazard, Paul Hastings LLP and FTI Consulting, Inc.
Additional information is available via the company’s restructuring website: https://cases.primeclerk.com/gcx
