GSI Group receives subscriptions for 80% of its rights offering shares

By Caroline Salls

Pittsburgh, July 14 - GSI Group Inc. said the subscription period for its rights offering resulted in subscriptions for about 80% of the total number of shares offered.

According to a company news release, 37.76 million shares of the reorganized company were subscribed for a total subscription price of $67.96 million.

The rights offering was conducted under GSI Group's plan of reorganization, which was confirmed on May 27 by the U.S. Bankruptcy Court for the District of Delaware.

Under the plan, the company offered to sell to holders of its common shares and vested rights to shares, up to a maximum of $85 million of new common shares upon emergence from bankruptcy at a purchase price per share of $1.80.

Of the total new common shares subscribed for in the rights offering, GSI said $64.89 million were subscribed for by payment in cash and $3.07 million were subscribed for by exchange of GSI Group's $210 million of 11% senior notes due 2013.

The rights offering expired on July 7.

Also under the plan and subject to the terms of a backstop commitment agreement, some senior noteholders have agreed to backstop the entire rights offering.

Specifically, the backstop investors agreed to purchase a minimum of $20 million of new common shares by exchanging the principal amount of senior notes for new common shares.

Because the difference between the total amount of the shares offered and the shares subscribed for in the rights offering is less than $20 million, GSI said it will issue 11.11 million of new common shares for $20 million under the backstop commitment.

According to the release, the rights offering will be completed upon the company's emergence from bankruptcy, which is expected to occur on July 23.

The cash proceeds will be held in escrow and released on the effective date and will be used to pay down the senior notes.

As a result of the rights offering and the shares to be issued under the backstop commitment, existing shareholders will receive 86 million new common shares or 86.1% of the company's post-reorganization outstanding shares and senior noteholders, including the backstop investors, will receive 13.89 million new common shares or 13.9% of the post-reorganization outstanding shares.

GSI Group would also issue $107.04 million of new debt in the form of new 12¼% senior secured PIK election notes.

Bedford, Mass.-based GSI makes precision motion component products, lasers and laser-based manufacturing systems. The company filed for bankruptcy on Nov. 20, 2009. Its Chapter 11 case number is 09-14109.

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