Another domino has fallen in the Indian soap opera that has surrounded Reliance Communications, but this time it’s the domino that touches the rest of the world. Global Cloud Xchange has filed for Chapter 11 bankruptcy protection in a Delaware court.
It’s a prepackaged reorganization plan aimed at reducing debt by $150M that is supported by over three quarters of lenders. The senior secured noteholders would become shareholders, and new loans would be provided to support GCX’s future growth. If all goes according to plan, the process will complete during Q4. Some sort of move had been inevitable since the company failed to pay $350M in 7% bonds last month.
GCX operates a global subsea cable business, the kernel of which derives from the dotcom era company FLAG. Today the company has some 68,000 subsea kilometers and is integrated with its parent Reliance’s domestic Indian fiber as well. They connect to 40 key markets worldwide directly via about 160 points of presence and deliver enterprise solutions across 160 countries.
Reliance has attempted to monetize the assets several times in the past few years, with various IPO plans and sale processes that didn’t result in anything. The company’s price tag just never matched up with the value buyers were willing to pay. Now assuming no buyer comes out of the woodwork during the BK process, the company will still be with us mostly intact.
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