Global Cloud Xchange makes pre-packaged Chapter 11 bankruptcy filing

By Caroline Salls

Pittsburgh, Sept. 16 – Reliance Communications Ltd. subsidiary Global Cloud Xchange (GCX) made a pre-packaged Chapter 11 bankruptcy filing Sunday in the U.S. Bankruptcy Court for the District of Delaware.

According to a news release, the pre-packaged plan of reorganization will support GCX’s long-term growth and development by reducing bond debt by $150 million, providing a permanent capital structure that includes a working capital facility and transitioning the business to new ownership.

Upon emergence from bankruptcy, GCX said it expects to be well-positioned to aggressively pursue its business plan independent of the overhang caused by its corporate parent’s challenges.

More than 75% of the company’s lenders have already committed their support for the plan, according to the release.

Under the plan, GCX’s senior secured noteholders would become owners of the company and provide new loans to support and grow the business.

To ensure GCX maximizes value for its stakeholders, the company said it also will use the protections and framework of Chapter 11 to conduct a sale process that welcomes additional prospective buyers.

Competing bids are due by 4 p.m. ET on Oct. 18. An auction will be held on Oct. 25, if necessary, and the plan confirmation hearing is scheduled for Nov. 13.

The company said it expects to emerge from bankruptcy in the fourth quarter, subject to all required regulatory approvals.

The plan does not call for any changes in business arrangements or activities for any GCX subsidiary, and all trade/vendor claims will be paid in full.

GCX has also filed the customary motions as part of its Chapter 11 case to compensate employees as usual, maintain its usual programs for customers and partners and otherwise operate its business as usual.

“We appreciate the strong collaboration with our lenders, which has resulted in a plan of reorganization that allows us to honor our commitments to employees, customers and suppliers while also securing a financially strong future for our business,” GCX chairman and chief executive officer Bill Barney said in the release.

“We are a fundamentally strong company. The steps we are announcing today will allow us to continue to build on our strengths and emerge as an even stronger employer and business partner.”

The company said entities included in the Chapter 11 process are borrowers or guarantors under GCX’s senior secured notes.

In conjunction with the bankruptcy filing, the company secured a commitment for $54.5 million in debtor-in-possession financing, of which $23.1 million will be available on an interim basis.

Wilmington Trust NA is the administrative agent and collateral agent.

The DIP facility will mature on the earliest of 5 p.m. ET on Dec. 31, the closing of a sale transaction, the effective date of a Chapter 11 plan and acceleration of the loans. The maturity date will be extended to Feb. 28 if all other effective date conditions have been met except for the receipt of required governmental approvals.

The facility will bear interest at a rate of 8½%.

According to court documents, GCX has $1 billion to $10 billion in both assets and debt.

The company’s largest unsecured creditors are Telecom Egypt Co. of Cairo, with a $15.99 million trade claim; Alcatel Submarine Networks SASU of Nozay, France, with a $6.01 million trade claim; E-Marine PJSC of Dubai, with a $5.52 million trade claim; Emirates Telecommunication Group Co. PJSC of Dubai, with a $3.69 million trade claim; China Mobile Ltd. of Hong Kong, with a $3.1 million trade claim; Verizon Communications Inc. of Irving, Tex., with a $1.84 million trade claim; Ciena Communications International, LLC of Hanover, Md., with a $1.95 million trade claim; Reliance BPO Private Ltd. of Mumbai, with a $1.71 million trade claim; Telecom Italia Sparkle SpA of Rome, with a $1.55 million trade claim; and Telecommunications Infrastructure Co. of Tehran, Iran, with a $1.43 million trade claim.

GCX is advised in its restructuring by Lazard, Paul Hastings LLP and FTI Consulting, Inc.

Global Cloud Xchange offers a comprehensive portfolio of solutions customized for carriers, enterprises and new media companies. It is based in London. The Chapter 11 case number is 19-12031.

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