Reliance Communications' subsidiary Global Cloud Xchange Limited (GCX) has filed for bankruptcy in the US.
GCX said in a statement that it has initiated voluntary, pre-packaged Chapter 11 restructuring with support from over 75 per cent of lenders.
"GCX today announced a pre-packaged plan of reorganization that will support its long-term growth and development by reducing bond debt by USD 150 million, providing a permanent capital structure that includes working capital facility and transitioning the business to new ownership. The company has initiated a voluntary case under Chapter 11 of the United States Bankruptcy Code to effectuate the plan...," GCX said in a statement.
GCX, which owns private undersea cable system spanning more than 68,000 route kms, is a subsidiary of Reliance Communications, and offers portfolio of solutions customised for carriers, enterprises and new media companies.
"More than 75 per cent of the company's lenders have already committed their support for the plan, which outlines the terms for a transaction through which GCX's senior secured noteholders would become owners of the company and provide new loans to support and grow the business," GCX statement said.
To ensure GCX maximises value for its stakeholders, it also will use the protections and framework of Chapter 11 to undertake a sale process that invites additional prospective buyers.
"GCX expects to complete the Chapter 11 process and emerge as a stronger company within the fourth quarter of 2019, subject to all required regulatory approvals," it said.
More From This Section
Notably, the latest move by GCX comes at a time when its parent Reliance Communications is also undergoing insolvency process.
The GCX statement further said that its customers, suppliers and employees should expect business as usual throughout the Chapter 11 process.
"The plan does not contemplate any changes in business arrangements or activities for any GCX subsidiary, and according to the terms of the plan, all trade/vendor claims will be paid in full," GCX said.
GCX Chairman and CEO Bill Barney said that steps announced on Monday will allow the company to continue to build on its strengths and emerge as "an even stronger employer and business partner".
"We appreciate the strong collaboration with our lenders, which has resulted in a plan of reorganization that allows us to honour our commitments to employees, customers and suppliers while also securing a financially strong future for our business," Barney said.