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Globix reaches restructuring agreement, plans Chapter 11 filing
New York, Jan. 14 - Globix Corp. said it reached an agreement on a financial restructuring with holders of a majority of its senior notes. The plan, which will be achieved through a voluntary Chapter 11 bankruptcy filing, proposes exchanging the existing notes for new notes and equity.
Globix said it has signed a lock-up agreement with holders of more than 51% of its outstanding $600 million of 12½% senior notes due 2010. It will now begin soliciting consents from other noteholders.
The New York internet hosting and services company said its convertible preferred shareholders have also agreed to the plan.
Globix expects to make its Chapter 11 filing in February and anticipates emerging quickly because holders of a majority of the bonds have agreed to the reorganization plan.
Under the proposed restructuring, the 12½% notes will be exchanged for $120 million in new senior secured notes due 2008 with interest of 11% payable in kind for at least two and up to four years and 13.991 million shares representing 85% of the equity of the reorganized company.
Current holders of Globix's series A 7½% convertible preferred stock will receive 2.3044 million shares representing 14% of the reorganized company's stock and current stockholders will receive 164,600 shares representing 1%.
The company said it will not be soliciting stockholders for their approval and will ask the bankruptcy court to waive this requirement and deem them to have rejected the plan.
Globix said the restructuring will save it $75 million in annual cash interest expense on the existing notes.
Globix added that its U.K. and European operations will be excluded from the Chapter 11 filing.
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