Court Approves GT Sale

GT Group Telecom gets approval for CN$260.5M sale to 360networks and the process for creditors to consider a Plan of Arrangement

November 21, 2002

2 Min Read

TORONTO and VANCOUVER -- GT Group Telecom Inc., Canada's largest independent, facilities-based telecommunications provider, today announced that the Ontario Superior Court of Justice issued orders determining a number of matters in its ongoing Companies' Creditors Arrangement Act (CCAA) proceeding that pave the way for GT's operating subsidiaries to emerge from protection and complete an acquisition by 360networks Corporation. The Court added LondonConnect Inc. to the CCAA proceedings. The Court also authorized GT and its subsidiaries to enter into a subscription agreement with 360networks and authorized the filing of a Plan of Arrangement and the related Information Circular by which 360networks will be the sponsor of GT's Plan. As set forth in the Plan, 360networks is paying C$260.5 million in cash for the equity of the operating companies of Group Telecom, subject to price adjustments tied to Group Telecom's balance sheet at December 31, 2002. "We will pay for this acquisition using GT's own cash and a cash investment from 360networks existing cash balances," said Vanessa Wittman, chief financial officer of 360networks. "We do not anticipate needing any equity funding from an outside party." The Court further established a process by which affected claims of secured and unsecured creditors of GT's direct and indirect subsidiaries GT Group Telecom Services Corp., GT Group Telecom (USA) Corp. and London Connect Inc. will be valued for both voting and distribution purposes. The Court authorized the mailing of the Companies' Information Circular describing the transaction on or before November 27, 2002 and the holding of meetings of creditors on December 19, 2002. The transaction is expected to close in early January of 2003. The Court also authorized the immediate implementation of an interim distribution of C$175 million to the Companies' senior secured lenders. The Court also lifted the stay of proceedings so as to permit the Toronto Stock Exchange to consider delisting or suspending GT Group Telecom's class A and class B shares, listed under the symbols, "GTG.A" and "GTG.B" respectively. Group Telecom will work with the TSX authorities to complete the delisting of the shares or the suspension of the share trading privileges. GT Group Telecom 360networks Inc.

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