GTT Communications enters bankruptcy

November 2021 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

November 2021 Issue

In a move designed to reduce its debt by approximately $2.8bn and bolster liquidity, global cloud networking provider GTT Communications, Inc. has entered into a restructuring support agreement (RSA) with key stakeholders, as well as filing for Chapter 11 bankruptcy protection.

Pursuant to the RSA, which places it on a path to improve its capital structure and execute its long-term business strategy, GTT expects to close the sale of its infrastructure division to private equity firm I Squared Capital – a deal initially announced in October 2020 – in the coming weeks, which will allow the company to repay a significant portion of its secured debt.

Following completion of the sale of the infrastructure division, GTT and certain of its direct and indirect subsidiaries intend to commence pre-packaged Chapter 11 cases to effectuate a deleveraging of GTT’s post-sale capital structure.

The Virginia-based company’s foreign businesses and operations outside of the US are not included in the forthcoming filing and will be unaffected by the Chapter 11 process. The company expects to emerge after obtaining the necessary regulatory approvals for the restructuring.

The RSA provides for vendors, employees and other partners to be paid in the ordinary course of business for obligations incurred prior to and after the commencement of the anticipated Chapter 11 cases.

Furthermore, GTT has stated that it has access to sufficient liquidity to operate its businesses, and with the support of its lenders will retain additional amounts from the sale proceeds to further strengthen its cash position.

“This global agreement among each of our creditor constituencies resulted from extensive negotiations and reflects the ongoing commitment of our debtholders to the business,” said Ernie Ortega, chief executive of GTT. “Our performance has been strong year-to-date, and we have a very competitive product portfolio in growing segments of the market, such as SD-WAN.”

Going forward, GTT’s strategy is to remain committed to serving national and multinational organisations with market-leading cloud networking services across a broad range of wide area network connectivity options. This includes its Tier 1 global IP network, SD-WAN, ethernet, MPLS and local access, as well as global SIP trunking, security and advanced solutions services.

“To continue this momentum, we are working together with our debtholders to improve GTT’s financial health and this is a major milestone to accomplish this goal,” added Mr Ortega.

GTT’s legal adviser in connection with the restructuring is Akin Gump Strauss Hauer & Feld LLP. Alvarez & Marsal North America, LLC serves as its restructuring adviser and TRS Advisors, a group within the investment banking division of Piper Sandler & Co., serves as its investment banker for the restructuring.

“I would like to thank our GTT team for continuing to deliver outstanding services to our valued clients and our board of directors for its steadfast support,” concluded Mr Ortega. “I would also like to express my utmost gratitude to our customers and valued partners around the globe with whom we are honoured to work.”

Fraser Tennant