Managed network services provider GTT Communications has exited all of its chapter 11 bankruptcy cases, having cut $2.8 billion off its debt and brought in new investors.
GTT, which filed for chapter 11 bankruptcy in October 2021, announced that it has completed its financial restructuring process. The announcement comes a little more than a month after GTT worked out a deal with key creditors to amend its reorganization plan in light of current macroeconomic challenges.
“Today marks the beginning of an important new chapter for GTT,” CEO Ernie Ortega said. “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’s bankruptcy came after an extended series of M&A. As part of the chapter 11 plan, GTT sold its infrastructure division to I Squared Capital for $2.1 billion. That gave the company a head-start on paying off its debts. Now GTT has reduced its debt by approximately 80%, according to a statement from the company.
“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,” Ortega said. “Thanks to these stakeholders, GTT has succeeded in completing its financial restructuring with a renewed focus on customer experience, operational efficiency, and providing the best of what our industry can offer to customers and partners across the globe.”
GTT on Nov. 27, 2022, filed an emergency motion with the United States Bankruptcy Court for the Southern District of New York. The company’s legal counsel stated that unforeseen events required them to amend their reorganization plan.
First, unexpected “macroeconomic headwinds” in the second half of 2022 put additional risks on GTT’s potential bankruptcy exit. Multiple large technology companies have cited supply chain disruptions, inflation and global conflicts as such headwinds. Moreover, layoffs and hiring freezes have swept across the vendor community, with many acknowledging the reality of a recession.
And GTT was no exception to feeling the heat.
“These macroeconomic conditions, which were beyond the debtors’ control, put pressure on the debtors’ EBITDA while threatening to further increase the cost of the proposed exit facilities under the confirmed plan,” GTT wrote.
In addition, GTT’s implementation of new processes and controls for cost of revenue reporting led to the revelation that their “long range business plan could be materially different than previously forecasted.” More specifically, GTT’s many acquisitions, whose integration efforts the company described as “insufficient,” had resulted in inconsistent network inventory records.
With those trends in mind, GTT negotiated with key creditors to amend parts of their restructuring plan. As a result, they created a new amendment to their restructuring support agreement. The amendments included the debtors retaining about $83 million in deferred consideration from the sale of GTT’s infrastructure division. In addition, creditors reduced GTT’s new term loans from $854 million to $783 million.
To read the details of the amendment in all of their glorious financial-speak, check out TheReorg.com’s article.
GTT in April unveiled a new board of directors, lead by former Broadview Networks director Tony Abate.
“The company’s board and new owners are looking forward to working with Ernie and the entire GTT team to build on the company’s momentum and our shared vision to serve businesses with network, security and communications needs across multiple locations globally. GTT is well-positioned to capture the growing demand for bandwidth, cybersecurity and managed services as enterprises optimize the performance of their own SaaS and cloud-based applications anywhere in the world,” Abate said.
GTT Americas president Jim Delis said the company looks forward to engaging with channel partners in 2023 and beyond.
“Today’s announcement is extremely positive news for GTT and our partners. We have emerged as a financially strengthened company with an enhanced capital structure and reduced debt. We continue to provide the highest quality service to customers around the world, with improved operations to capitalize on new market opportunities for networking and security services,” Delis told Channel Futures.
In addition, GTT Americas channel leader Ken Bisnoff indicated in an interview with Channel Futures last year that the reorganization plan had left sales agent commissions untouched.
Delis joined GTT a full year ago, followed shortly after by Bisnoff. Delis joined with orders from Ortega to grow to grow GTT’s channel presence.
And for both Delis and Bisnoff, growing the channel meant engaging in operational improvements And it seems to be a significant emphasis for the larger company following its dozens of acquisitions. For example, Delis said last year that GTT had unified its 11 separate network operations centers.
“The M&A culture is behind the business,” Bisnoff told Channel Futures in April. “It’s all about being customer-first at the end of the day.” Channel Futures