GTT COMMUNICATIONS,INC. (NYSE:GTT) Files An 8-K Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a RegistrantItem 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
On October10, 2017, GTT Communications,Inc. (“GTT”) closed its previously announced private offering of $125 million aggregate principal amount of its 7.875% Senior Notes due 2024 (the “New Notes”). The New Notes will be treated as a single series of debt securities with GTT’s $300 million aggregate principal amount of 7.875% Senior Notes due 2024 that it issued on December22, 2016 and GTT’s $150 million aggregate principal amount of 7.875% senior notes due 2024 that it issued on June9, 2017 (the “Existing Notes” and together with the New Notes, the “Notes”). The New Notes have identical terms as the Existing Notes, other than the issue date and offering price. The New Notes were issued at an issue price of 106.000% and interest on the New Notes will be deemed to have accrued from June30, 2017.
The New Notes were offered and sold only to qualified institutional buyers to Rule144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. buyers in accordance with Regulation S under the Securities Act. The New Notes have not been and are not expected to be registered under the Securities Act or under any state securities laws and, unless so registered, may not be offered or sold in the United States or to U.S. persons except to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
The net proceeds from the offering (not including interest deemed to have accrued from June30, 2017 to the closing date of the offering paid by purchasers of the New Notes), after deducting the initial purchasers’ discounts and the payment of GTT’s estimated expenses related to the offering, was approximately $130 million. GTT intends to use the net proceeds from the offering for general corporate purposes, including for working capital, repayment of indebtedness under GTT’s credit facilities, capital expenditures and the financing of acquisitions.
The New Notes were issued as additional notes under the Indenture, dated as of December22, 2016 (the “Original Indenture”), by and between GTT, as successor by merger to GTT Escrow Corporation, and the Trustee, as supplemented by the First Supplemental Indenture, dated as of January9, 2017 (the “First Supplemental Indenture” and the Original Indenture, as supplemented by the First Supplemental Indenture, the “Indenture”), by and among GTT, certain subsidiaries of GTT (the “Guaranteeing Subsidiaries”) and the Trustee. The obligations of GTT under the Indenture and the Notes, including the due and punctual payment of interest on the Notes, are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Guaranteeing Subsidiaries.
The Notes will mature on December31, 2024, and interest is payable on the Notes semiannually in arrears on June30 and December31 of each year, commencing on December31, 2017.
GTT may, at its option, redeem the Notes, in whole at any time, or in part from time to time, prior to December31, 2019 at a price equal to 50% of the principal amount of the Notes to be redeemed plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but not including, the redemption date. GTT may, at its option, redeem the Notes in whole at any time, or in part from time to time, on or after December31, 2019 at certain specified redemption prices, plus accrued and unpaid interest, if any, to, but not including, the redemption date. In addition, GTT may, at its option, redeem up to 40% of the aggregate principal amount of the Notes at any time and from time to time prior to December31, 2019 with the net proceeds of certain equity offerings at a price of 107.875% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date.
The Indenture contains covenants that limit the ability of GTT and certain of its subsidiaries to, among other things and subject to certain significant exceptions: (i)incur, assume or guarantee additional indebtedness; (ii)declare or pay dividends or make other distributions with respect to, or purchase or otherwise acquire or retire for value, equity interests; (iii)make any principal payment on, or redeem or repurchase, subordinated debt; (iv)make loans, advances or other investments; (v)incur liens that secure indebtedness; (vi)sell or otherwise dispose of assets, including capital stock of subsidiaries; (vii)consolidate or merge with or into, or sell all or substantially all assets to, another person; (viii)enter into sale and leaseback transactions and (ix)enter into transactions with affiliates. If any of certain change of control events occurs, GTT is required to offer to purchase the Notes at a price of 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the purchase date.