GCX bondholders hold off on $350m payment due tomorrow

GCX bondholders hold off on $350m payment due tomorrow

31 July 2019 | Alan Burkitt-Gray

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Subsea cable operate Global Cloud Xchange says that 87% of its bondholders are prepared to wait another two weeks for the $350 million that is due to be paid tomorrow.

And they may wait another two weeks beyond that, if Global Cloud Xchange (GCX) continues to progress in its negotiations, the company said today.

The $350 million bond repayment has been hanging over GCX for years, while it tried to untangle itself from Indian operator Reliance Communications (RCom) – now politely called a “distressed” telecoms firm.

“We appreciate our lenders continued support as we take these next steps and look forward to using the additional time the forbearance agreement provides to pursue the desired refinancing transaction under the best possible terms,” said Bill Barney (pictured), chairman and CEO of GCX, this morning.

“Meanwhile, we continue to operate as usual as a fundamentally strong company that is uniquely positioned to capture opportunities in our fast-growing markets.”

The agreement by the 87% of bondholders, who have been earning a coupon rate – effectively interest rate – of 7%, means they and GCX have “additional time to discuss options related to the upcoming maturity”, said the company.

Their agreement means they are in line for an additional 2% consent fee as well as interest – though these sums will be added to the outstanding amount rather than being paid in cash.

And they will earn “a fee equal to 5% of the outstanding principal amount of the bonds” if they are “subsequently refinanced in full”.

Last week lenders to RCom asked Ericsson to refund 5.8 billion rupees ($84 million) in unpaid bills that the equipment vendor received after threatening chairman Anil Ambani with jail. RCom’s lenders are saying that the payment to Ericsson qualifies as a preferential transaction under the India’s insolvency and bankruptcy code – meaning that Ericsson managed to get itself ahead of other creditors in the queue for payment.

RCom was admitted for insolvency proceedings in India’s National Company Law Tribunal in February 2019.