GTT Communications: Planning To File Chapter 11

According to Virginia Business:

McLean-based telecommunications company GTT Communications Inc. is planning to file a prepackaged chapter 11 case after it closes the previously announced sale of its infrastructure division to Miami-based I Squared Capital, it announced Thursday.

After the completion of the $2.15 billion sale, GTT and some subsidiaries will file their cases in the U.S. Bankruptcy Court for the Southern District of New York. A Chapter 11 filing, or “reorganization” bankruptcy, allows the company to continue to operate its business. GTT’s operations outside the U.S. will be unaffected.

The company said it expected to continue operating without interruption. The restructuring support agreement it signed with stakeholders, including I Squared Capital, provides for payment of vendors, employees and other partners for costs incurred in the ordinary course of business. GTT stated it has sufficient liquidity to operate, and with the support of its lenders, will retain money from the infrastructure division sale“.

BDC exposure to GTT Communications is VERY modest: $0.577mn at cost in first lien debt. The FMV was $0.583mn as of June 2021. The BDC lender involved is non-traded Steele Creek Capital Corp. We normally wouldn’t bother with a post given such a modest exposure, even for a BDC with only $208mn in portfolio assets. However, with so few bankruptcies of BDC-financed companies of late, GTT seems to deserve mention – even if briefly.

On Marketwatch, we learned that GTT has just sold its infrastructure division for $2.8bn, the proceeds of which will reduce existing debt. There’s also a restructuring agreement in place in advance of the bankruptcy between the company and its lenders. Everything seems to point to a full repayment of Steele Creek – which only added this debt in the IQ 2021 – or a very modest loss.