GTT completes $2B infrastructure sale
McLean-based telecom business to file Chapter 11
McLean-based telecommunications company GTT Communications Inc. finalized the sale of its infrastructure division to Miami-based I Squared Capital, the company announced Friday, allowing GTT to move forward on Chapter 11 bankruptcy.
Although the financial details were not disclosed by the companies this week, the sale price was anticipated to be $2.15 billion in October 2020.
According to the Securities and Exchange Commission filing, the total cash consideration paid to GTT is approximately $1.74 billion and other cash amounts are anticipated to be paid to GTT in the future, contingent on certain milestones.
With the completion of the sale, a new company has formed. Led by CEO Martijn Blanken, London-based EXA Infrastructure will maintain about 64,000 miles of fiber network that connects 300 cities. I Squared Capital also obtained three transatlantic subsea cables, 14 Tier 3 data centers and more than 100 colocation facilities.
Blanken previously held positions with Telstra Corp. and I Squared.
Earlier this month, GTT announced that it was planning to file a prepackaged chapter 11 case after the sale of the division. GTT has not yet filed in the U.S. Bankruptcy Court for the Southern District of New York, a spokeswoman said Friday.
The combination of the sale and the recent restructuring will reduce GTT’s debt by $2.8 billion.
Approximately 420 GTT employees will go to EXA, and GTT will retain 2,420 employees, a GTT spokeswoman said.
“This is a major milestone for GTT as we move away from infrastructure ownership and maintenance to deepen our focus on serving the global enterprise market with a full array of cloud networking and managed solutions that include SD-WAN, security, internet, voice and other vital telecommunication services that enable digital business,” GTT CEO Ernie Ortega said in a statement. “We have a great team of employees and a company culture that is responsive to the needs of our customers, coupled with an industry-leading internet backbone and a product roadmap aligned to trending market demand. I am confident that our sharper strategic focus will enable us to better serve our customers.”
Ortega took over in early June after Richard D. Calder, who had been GTT’s president and CEO since 2007, left the company.
The infrastructure now operated by EXA largely results from GTT Communications’ prior acquisitions of Interoute, Hibernia Networks and KPN International, according to a news release from EXA.
“The creation of EXA, the way that we will serve our customers and our commitment to continual investment in our business is all down to one word: focus. We will have a relentless focus on the data-center-to-data center infrastructure services we provide, enabling our customers to provide the most compelling experiences to their clients and end-users,” Blanken said in a statement. “We are determined to become the undisputed leader in the digital infrastructure industry in the European, trans-Atlantic and North American market. In order to achieve that ambition, we will make material investments to expand our network footprint, in close collaboration with our customers, to meet the ever-growing need to carry data around key routes in the region.”