The move follows the completion in September of the US$2.1 billion sale of its infrastructure division to I Squared Capital (ISQ). That unit is now in business as an independent entity under the name Exa Infratructure.
GTT CEO Ernie Ortega (pictured) emphasised that the move was a pre-packaged plan, supported by GTT’s lenders. “I am pleased by the support we’ve received from our debtholders and other stakeholders demonstrating their confidence in the company’s business plan and long-term strategy,” he said.
In an exclusive interview in September with Capacity, Ortega said the sale was “GTT getting back to its roots and core competencies”.
He said then of the chapter 11 move that “because we are going in with a consensual deal with our credit constituency we will get through this process quickly”. He told Capacity then that GTT’s creditors will become its major shareholders, and said they were very much in agreement with the plan, which he described as “GTT 2.0”.
In this week’s announcement, GTT says that the sale of the infrastructure division “and the transactions contemplated by the pre-packaged plan will reduce the company’s debt by approximately $2.8 billion”.
Debt is GTT’s big problem. Its share price is now virtually zero – in actuality, $0.06 a share as of last night’s close, giving the company a market capitalisation of $3.34 million, just a tenth of what it was in January 2021 and a thousandth of the value at its all-time high in March 2018.
GTT said that, during the restructuring process, “business continues as usual and without interruption both in the US and globally”, and said that “vendors, employees and other partners [will] be paid in the ordinary course of business”.
The company said that the move has the support of “lenders holding over 88% of the aggregate outstanding principal amount of GTT’s secured loans and holders of over 88% of the aggregate outstanding principal amount of GTT’s 7.875% Senior Notes due 2024”.
It said that “all lenders and noteholders that voted on the pre-packaged plan voted to accept”. GTT is seeking to have the plan confirmed in mid-December.
This will take GTT on what it called “its path to improve its capital structure and execute its long-term business strategy”.
Ortega said that, following the infrastructure sale to ISQ, “repaid a significant portion of our secured debt, as we said we would”.
He said: “Commencing the company’s chapter 11 cases is the next major milestone that enables us to further strengthen our financial position as we continue to operate our business around the world.”
He added: “GTT remains committed to providing market-leading network solutions to our clients throughout the restructuring process and beyond. The main pillars of our business strategy that focus on operational excellence and providing a differentiated customer experience remain intact.”
