GTT gets interim OK of cash collateral use; plan hearing set for Dec. 15

By Sarah Lizee

Olympia, Wash., Nov. 5 – GTT Communications, Inc. received interim approval to use the cash collateral of its pre-petition secured lenders, according to an interim order filed Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

The access to cash collateral is set to expire in 45 days.

Also on Thursday, the court scheduled the combined hearing on approval of the disclosure statement and confirmation of the Chapter 11 plan for Dec. 15.

As previously reported, on Sept. 1, GTT had entered into a restructuring support agreement with key stakeholders, including holders of a majority of its secured and unsecured debt and I Squared Capital, to implement a comprehensive restructuring of the company’s balance sheet following the sale of its infrastructure division to I Squared Capital. The sale closed on Sept. 16.

Subsequent to executing the RSA and the closing of the sale, GTT solicited acceptances of its pre-packaged plan, which received overwhelming support from its debtholders.

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 7/8% senior notes due 2024, including all lenders and noteholders that voted on the pre-packaged plan, voted to accept.

GTT said the plan advances the company on its path to improve its capital structure and execute its long-term business strategy. The combination of the completed infrastructure division sale and the transactions contemplated by the pre-packaged plan will reduce the company’s debt by about $2.8 billion.

According to the company’s disclosure statement, the plan includes conversion of about $1.44 billion of the 2018 credit facility claims into a combination of 88% of new equity interests, subject to dilution by a management incentive plan and new equity interests issuable upon exercise of the noteholders warrants and/or the equity holder warrants; a new $854 million senior secured term loan facility; and cash distributions. The company will also obtain a $75 million exit revolving credit facility.

The plan also includes conversion of about $575 million in principal amount, plus accrued interest as of the petition date, of the senior notes claims to 12% of the new equity interests, subject to dilution; and warrants exercisable for 30% of the new equity interests, which will have a five-year term and an initial exercise price based on an equity value of the reorganized parent that, as of the effective date, provides for payment in full of the allowed amount of the total 2018 credit facility claims that are to be distributed to holders of senior notes claims.

General unsecured claims will be paid in full in cash.

The plan also provides for distribution of the warrants exercisable for 4.9% of the new equity interests, which will have a five-year term and an initial exercise price based on a $2.8 billion enterprise value of the reorganized parent that are to be distributed to holders of existing GTT equity interests.

Section 510(b) claims will be canceled with no distribution.

Intercompany claims and intercompany interests will be adjusted, reinstated, or canceled and released with no distribution.

GTT is a McLean, Va.-based cloud networking provider that filed bankruptcy on Oct. 31 under Chapter 11 case number 21-11880.

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