GT Group Telecom Completes CCAA Restructuring Proceedings and Combines with 360networks

On February 4, 2003, GT Group Telecom Services Corporation, GT Group Telecom Services (U.S.A.) Corporation and London Connect Inc. successfully completed an intensive year-long effort to restructure their businesses. The GT companies commenced restructuring efforts in 2002 with nearly $2 billion of outstanding debt obligations and initiated CCAA proceedings in June. The restructuring culminated in the acquisition of the GT operating companies by 360networks Corporation, a provider of data telecommunications services. Both companies undertook financial restructuring proceeding this year. The acquisition is seen as a significant step towards consolidation in the telecom sector, creating one of Canada’s largest independent, network-owned telecom businesses.

Under the $250 million all-cash deal, GT’s existing shares were cancelled and 360networks received new shares in each of the GT operating companies. The transaction was implemented through a plan of arrangement under the Companies’ Creditors Arrangement Act and a plan of reorganization under the Canada Business Corporations Act, court sanction, and regulatory approvals. The plan was sanctioned by an order of The Superior Court of Justice on December 23, 2002, from which leave to appeal was denied by a panel of the Court of Appeal on January 27, 2002. Under the plan, secured creditors of GT received a distribution of approximately $250 million and unsecured creditors share in a pool of $3 million. The restructuring also involved substantial cross-border work, with ongoing proceedings in New York under the U.S. Bankruptcy Code.

Torys LLP acted for GT on both sides of the border, with a team that included Tony De Marinis, Jamie Scarlett, Scott Bomhof, John Laskin, Michael Pckersgill, Marc Lavigne, Jamie Feehley, Suh Kim, Crawford Smith, David Outerbridge, Corrado Cardarelli, Ron Nobrega, Gary Solway, Jay Holsten, Phil Mohtadi and Trisha Jackson in Toronto, and Bill Gray, Alison Bauer, Edie Walters and Martin Dunleavy in New York. The in-house legal team at GT was led by Mark Hemingway. David Baird of Torys was appointed a director and chair of the Board’s special committee in September 2002.

Group Telecom’s secured lenders, Lucent Technologies as a lender and agent for other lenders in its syndicate, Canadian Imperial Bank of Commerce as a lender and agent for other lenders in its syndicate, and Cisco Systems Capital Canada Co. as a lender and agent for other lenders in its syndicate, were represented by Sheryl Seigel and John Abraham (restructuring and banking) of Fasken Martineau DuMoulin LLP, Kevin McElcheran and Jems Dube (restructuring) and David Kee (banking) of Blake, Cassels and Graydon LLP, and Ross Walker and Shayne Kukulowicz (restructuring) of Fraser Milner Casgrain LLP. In Canada, Geoff Morawetz, Rob Chadwick and Jessica Berry of Goodmans LLP acted for the court-appointed monitor, Pricewaterhouse-Coopers LLP. The monitor was represented in the U.S. by Jeffrey Cymbler and Rochelle Weisburg of Angel & Frankel, P.C. in New York. The secured lenders’ U.S. counsel was Joseph Lubertazzi Jr., and Lisa DeRose in Newark, New Jersey.

360networks was represented by Fasken Martineau DuMoulin LLP with a team that included Michael Fitchy, Peter Finley and Brent Lewis. 360’s in-house legal team, led y Lin Gentemann, worked closely with Fasken on the transaction. Borden Ladner Gervais LLP acted as Ontario counsel to 360. 360 was represented in the U.S. by Alan Lipkin of Gould & Wilkie in New York.