GSI Group Announces Non-Binding Term Sheet Regarding Restructuring of Senior Notes
Published July 1st, 2009
GSI Group Inc. (NASDAQ: GSIG) today announced that it has reached agreement on a non-binding term sheet (the “Term Sheet”) with certain beneficial owners (the “Investors”) holding greater than 75% of the outstanding aggregate principal amount of its 11% Senior Notes (the “Notes”) to restructure the Company’s outstanding obligations under the Notes. Pursuant to this term sheet, the Company would exchange the Notes for (a) a new $95 million secured loan due January 2014, and (b) common stock representing 80% of the Company’s fully diluted equity ownership. The interest rate on the new term loan would be 12.25%, and at the Company’s option, would be payable in kind at a compounded rate of 13%. As part of the proposed transaction, existing shareholders would receive warrants to purchase 10% of the post-transaction fully diluted outstanding shares of the Company at an imputed price of $1.10 per share and 10% of the post-transaction fully diluted outstanding shares of the Company at an imputed price of $2.00 per share. The Company is currently engaged in discussions with the Investors regarding implementation of the proposed transaction and attendant definitive documentation. A copy of the Term Sheet is attached to this press release.
Commenting on the potential restructuring, Sergio Edelstein, Chief Executive Officer of the Company, stated “The current economic downturn has resulted in a significant decline in historical and projected operating profit. The Company is pursuing the potential restructuring plan in order to address the need to significantly deleverage the Company in light of these circumstances. This reduction in our debt load and the anticipated improvement in our liquidity will give us a strong financial foundation upon which to grow the Company.”
Rick Black, Chairman of the GSI Board of Directors stated “The Board fully supports management’s efforts to rationalize the Company’s capital structure in light of the current economic environment and in order to maximize the interests of all stakeholders. We believe that the proposed restructuring will position the Company to capitalize on its strong industry position as our markets recover.”
