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GSI Group, 11% noteholders ink non-binding deal to exchange notes
By Caroline Salls
Pittsburgh, June 30 - GSI Group Inc. has reached an agreement on a non-binding term sheet with some beneficial holders of more than 75% of the outstanding principal amount of its 11% senior notes due 2013 to restructure the company's outstanding notes, according to a company news release.
Under the term sheet, the company would exchange the notes for a new $95 million secured loan due January 2014 and 80% of the common stock in GSI.
The interest rate on the new term loan would be 12¼%, and at the company's option, would be payable in kind at a compounded rate of 13%.
As part of the proposed transaction, GSI said existing shareholders would receive warrants to purchase 10% of the post-transaction outstanding shares of the company at an imputed price of $1.10 per share and 10% of the post-transaction outstanding shares at an imputed price of $2.00 per share.
"The current economic downturn has resulted in a significant decline in historical and projected operating profit," chief executive officer Sergio Edelstein said in the release.
"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."
GSI said it is in talks with the investors to implement the proposed transaction.
The company will pay a consent fee of 1% of the outstanding principal amount of senior notes in connection with the restructuring.
GSI said it will make all scheduled interest payments on the notes when due before the transaction closes.
Bedford, Mass.-based GSI makes precision motion component products, lasers and laser-based manufacturing systems.
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