GTT keeps high liquidity during Covid-19, draws $55 million on revolver

By Devika Patel

Knoxville, Tenn., May 8 – GTT Communications Inc. drew $55 million under its $250 million revolver last quarter as part of a bid to maintain strong liquidity during the Covid-19 pandemic.

The company had $106.4 million of cash and cash equivalents as of March 31 and $174 million of unused and available capacity under its revolver.

“Our liquidity remains strong,” president and chief executive officer Richard D. Calder Jr. said on the company’s first quarter ended March 31 earnings conference call on Friday.

“We continue to take actions to improve the strength of our balance sheet,” Calder said.

The company drew $55 million on its revolver last quarter.

“During the quarter we drew $55 million on our $250 million revolver, which brought us to a total draw of $65 million,” chief financial officer Steven Berns said on the call.

“As a reminder, the senior leveraged covenants threshold is only measured when there is more than $75 million drawn under the revolver,” Berns said.

The company has $174 million of unused and available capacity under the revolver and also settled a $140 million term loan last quarter.

As a result of the Covid-19 pandemic, the company saw an increase in demand for its internet services, but installs slowed and churn orders decreased.

“As a result of the pandemic we anticipated that installs would slow, which is what we saw at the end of 1Q 2020 and into 2Q 2020 as many clients cannot provide access to certain premises,” Calder said.

“Moving into 2Q, we have also seen reduced churn orders as clients maintain their existing services for longer periods.

“We have seen increased demand and usage traffic for our internet services, particularly high capacity dedicated internet and IP transit services.

“We have been upgrading bandwidth capacity remotely for many clients as they utilize the internet more intensively during this period,” Calder said.

New sales activity is high.

“Despite the pandemic we continue to have significant levels of new sales activity that should generate results going forward, particularly once our installation pace returns to reasonably normal levels,” Calder said.

The company is cutting costs due to the current uncertainty.

“As a result of the uncertainty of the continuing impacts of Covid-19, we are now taking specific actions to reduce our cost base to ensure we deliver a competitive level of profitability in line with our guarded outlook in the current environment,” Calder said.

The company reported adjusted EBITDA of $89.3 million for the quarter, a 13.1% decrease compared to the fourth quarter of 2019 and a 26.9% decrease compared to the first quarter of 2019.

Long-term debt was $3,228,400,000 as of March 31, 2020, compared to $3,192,600,000 as of Dec. 31, 2019.

Total secured net leverage was approximately 6.5x on a trailing 12-month basis as of March 31.

On Feb. 28, GTT amended its credit agreement to establish a $140 million term loan.

The term loan was incurred with an original issue discount of $5.6 million.

Included in the term loan is call protection of 102 in year one and 101 in year two.

Goldman Sachs Lending Partners LLC acted as the arranger and lender on the term loan. KeyBank is the administrative agent.

Proceeds were used to pay down substantially all revolving credit facility borrowings.

GTT is a McLean, Va.-based cloud networking provider.

© 2015 Prospect News.
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