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GTS Witholds Payments on Bonds

Elects not to pay interest on 2 bonds while it discusses reduction of its €1.65 billion debt burden

June 1, 2001

2 Min Read

Global TeleSystems, Inc. (“GTS”) (NYSE: GTS; EASDAQ: GTSG; Frankfurt: GTS) and GTS Europe BV (“GTS Europe”), a wholly-owned subsidiary of GTS, has announced plans to initiate discussions with the holders of their public debt and preferred securities regarding a balance sheet recapitalisation to reduce the debt and interest burden of these companies. In view of these pending discussions, GTS Europe has decided not to pay cash interest payments, due on 1 June 2001, of €15.1 million on its GTS Europe BV 11% €275 million Senior Notes due 2009 and €11.8 million on its GTS Europe BV 10.5% €225 million Senior Notes due 2006. These non-payments will not constitute events of default under the indentures governing these notes unless interest is not paid by 1 July 2001.

Robert Amman, Chairman and CEO of GTS, said: “We are taking these actions as a major step toward recapitalising the balance sheets of these companies at a time when our liquidity has been strengthened through our recent restructuring successes. We intend to begin consensual discussions next week with the holders of all of the public debt and preferred securities of GTS and GTS Europe BV. In these discussions, we will explore various options for reducing our €1.65 billion total public debt burden and the €158 million in associated annual cash interest obligations in an effort to provide greater upside opportunities for all of our stakeholders.”

He continued: “Ebone, GTS’s core business unit and Europe’s leading provider of optical IP and broadband services, and all other GTS operations, will continue to operate in the normal course. Specifically, we will continue satisfying all obligations to customers, suppliers, partners and staff, consistent with our normal business practices.”

He added: “Our restructuring programme has been successful to date. Our accomplishments include reaching a consensual agreement to divest our Business Service operations and eliminate approximately $500 million of debt associated with our former Esprit Telecom subsidiary; eliminating a further $104 million of debt through voluntary debt/equity conversions; and raising $260 million of new cash through the sale of non-core assets. Taking these actions to recapitalise the balance sheet and strengthen the capital structure of GTS and GTS Europe are the next logical steps in establishing Ebone as a strong, well funded, EBITDA positive company that remains the market leader for broadband services in Europe.”

GTS has retained Houlihan Lokey Howard & Zukin as its investment banker to assist in developing a financial restructuring plan and undertaking discussions with GTS and GTS Europe bondholders and preferred stockholders. The company plans to have an initial telephonic discussion with all interested note holders on Wednesday June 6th at 12:00 pm EDT. For further information, contact David Hilty or Tanja Aalto at +1 212 497 4100.

Global TeleSystems Inc. (GTS) (NYSE/Frankfurt: GTS)

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