GTT finally, fully, out of Chapter 11 reconstruction
GTT, which almost collapsed in 2021 thanks to a mountain of debt, has completed its financial restructuring process and emerged from its chapter 11 cases – plural.
The company spent billions over the years up to 2021, buying companies such as Hibernia Express and Interoute. They were packaged up with other fibre-owning companies and sold in 2021 for US$2.1 billion to a private equity investor as Exa Infrastructure.
“Today marks the beginning of an important new chapter for GTT,” said Ernie Ortega (pictured), who was brought in as CEO in June 2019.
“Over the past two years, we have concentrated relentlessly on transforming our business into a customer-focused, managed services provider with a culture of continuous improvement. As we begin 2023 on a new path, I’m tremendously excited about the opportunities ahead.”
GTT said the sale of its infrastructure division in 2021 and its financial restructuring process had reduced its debt by $2.8 billion, or approximately 80%.
During the boom and bust years, GTT’s share price plummeted. In February 2020 the company was worth $743 million on the New York Stock Exchange, less than a quarter of what it had spent on acquisitions in the previous three years.
Now, says the restructured company, “With an enhanced capital structure and new investor leadership as a privately held company, GTT stands well-positioned to continue its transformation as a customer-focused, managed services provider delivering world-class service to its global customer base and execute on continuous operational improvement opportunities. ”
Affiliates managed by private equity investor Lone Star Funds, Anchorage Capital, Fidelity and Cheyne Capital, collectively comprise the new investor leadership and own a majority of GTT’s reorganized equity, said the company.
Tony Abate was appointed to the board last year, before Lone Star’s involvement with GTT. He has now become chairman of the board. Last night GTT announced that Beau Harbour, managing director at Lone Star, and Alex Grau, managing director at Hudson Advisors, an investment advisor to Lone Star, have joined GTT’s board of directors.
Ortega said: “We have more exciting developments to share in the coming weeks, but right now I want to thank our employees, customers, and partners, whose confidence in GTT has underpinned our commitment to realizing this company’s incredible potential.”
It’s been a long process for Ortega and his backers. In September 2021 he told Capacity that the sale of its infrastructure assets to I Squared Capital as “GTT getting back to its roots and core competencies”.
He added: “We’ve always characterised ourselves as an asset light business model. So, that doesn’t necessarily mean by divesting ourselves of the infrastructure business that we don’t have assets, because we still have a Tier 1 IP backbone.”
Meanwhile, Rick Calder, the former chair and CEO of GTT who for 13 years presided over the spending spree that included Hibernia Express and Interoute, is chairing the board of Educare DC, a provider of childcare in Washington.