We may see an independent Global Cloud Xchange emerge from the downfall of India's Reliance Communications. The conglomerate's international subsea and cloud connectivity arm announced late last week that it has a new plan for reorganization that will see the company emerge from the bankruptcy process as an independent company.
As it went into Chapter 11 bankruptcy proceedings in September, GCX was looking for possible buyers. They have now stopped looking, and instead say that with strong support from the company's senior secured noteholders (and, if all this works, future shareholders I suppose), they now feel the best pathway to maximizing value will have them emerge as an independent company. The plan will see the company's debt reduced by $150M and gain some working. CEO Bill Barney would likely remain at the helm. The company will have a hearing in early December to get the bankruptcy court's approval for the process.
Of course the other way to see this is that no buyers showed up to the table with offers sufficient to satisfy those lenders. At the core of its infrastructure GCX operates five major subsea cable systems today: FA-1 across the Atlantic, FEA between Eruope and Asia, FNAL for intra-asia, FALCON in the Middle East and Asia, and HAWK between Europe and the Middle East. Four of those cables, of course, were built by FLAG back in the dot-com bubble days, and hence aren't exactly new. GCX also operates that fiber backbone in India itself, an asset whose value I don't quite have a feel for.
A bidder could still emerge for GCX, although there has certainly been enough time for potential buyers to kick the tires. Reliance put the company on the market several times in the 5-year run-up to its current debacle. Instead, though, it feels like FLAG, errrr, I mean GCX will rise again.
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