GTT Sells Some Stock, Builds War Chest

May 14th, 2014 by · Leave a Comment

The global network operator GTT is accessing the capital markets, according to an announcement today.  They are looking to sell just over 4.45M shares, of which the 0.45M will be by several large shareholders.  Not including any over-allotments, the company expect to raise in the neighborhood of $37.5M in cash.

TRImage_169 May. 14Of course it's also dilution of about 17%, so the stock is down this morning in response (5% at the moment).  The filing gives the purpose to which the funds will go as general corporate purposes, with the usual suspects.  But given the company's goal of $400M in revenue and $100M in adjusted EBITDA in a timeframe faster than organic growth alone can manage, it seems likely to me that M&A is the most likely intended use.

At this point, I'd guess some bolt-on cloud networking services & capabilities are probably the kind of target they have in mind.  However, in the prospectus they mention expansion into the southern hemisphere as part of their growth plans, so they could be looking at something in that direction.

GTT reported earnings late last week, posting revenues of $47.5M and adjusted EBITDA of $8.4M, both up nicely from the fourth quarter numbers of $46.1M and $8.1M.   Both were also well above the same quarter last year, which was of course prior to the acquisition of the Inteliquent IP and Ethernet backbone.

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Categories: Financials · Internet Backbones

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