Item 1.01. Entry into a Material Definitive Agreement.
As previously disclosed, on October 28, 2020, (a) GTT Communications, Inc. (the “Company”) and the guarantors under that certain Indenture, dated as of December 22, 2016 (as amended, supplemented or otherwise modified, the “Indenture”), by and between the Company, as successor by merger to GTT Escrow Corporation, and Wilmington Trust, National Association, as Trustee (the “Trustee”), entered into a Forbearance Agreement (the “Notes Forbearance Agreement”) with certain beneficial owners (or nominees, investment managers, advisors or subadvisors for the beneficial owners) (the “Initial Forbearing Noteholders”) of a majority of the outstanding aggregate principal amount of the Company’s outstanding 7.875% Senior Notes due 2024 (the “Notes”); and (b) the Company, GTT Communications B.V. (“GTT B.V.”) and certain guarantors of the obligations under that certain Credit Agreement, dated as of May 31, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified, the “Credit Agreement”) by and among the Company and GTT B.V., as borrowers, KeyBank National Association, as administrative agent and letter of credit issuer (the “Agent”), and the lenders and other financial institutions party thereto from time to time, entered into a Forbearance Agreement (the “Credit Facilities Forbearance Agreement” and collectively with the Notes Forbearance Agreement, the “Forbearance Agreements”) with (i) certain lenders (the “Forbearing Lenders”) party to the Credit Agreement, holding (A) a majority of the outstanding loans and revolving commitments under the Credit Agreement (“Required Lenders”) and (B) a majority of the revolving commitments under the Credit Agreement (“Required Revolving Lenders) and (ii) the Agent. Between October 28, 2020 and November 11, 2020, certain additional beneficial owners (or nominees, investment managers, advisors or subadvisors for the beneficial owners) of the Notes (the “Additional Forbearing Noteholders,” and together with the Initial Forbearing Noteholders, the “Forbearing Noteholders”) executed and delivered the Notes Forbearance Agreement.
As further described in the Company’s Current Report on Form 8-K filed on October 28, 2020, among other provisions, the Forbearing Noteholders and the Forbearing Lenders agreed to forbear from exercising any and all rights and remedies related to the Company’s failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2020 (the “Q2 SEC Report”) and the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020 (the “Q3 SEC Report”) until the earlier of (i) 5:00 p.m., New York City time, on November 30, 2020 and (ii) the receipt of notice from the Forbearing Noteholders or the Forbearing Lenders, as applicable, regarding their intent to terminate the applicable Forbearance Agreement upon the occurrence of certain specified forbearance defaults.
The scheduled expiration time under the Notes Forbearance Agreement may be extended with the consent of Forbearing Noteholders holding more than 66.7% of the aggregate principal amount of the Notes held by all Forbearing Noteholders, provided that at least two of such consenting Forbearing Noteholders are unaffiliated (“Requisite Forbearing Noteholders”). The scheduled expiration time under the Credit Facilities Forbearance Agreement may be extended with the consent of (i) Required Lenders and (ii) Required Revolving Lenders (collectively, “Requisite Forbearing Lenders”). As previously disclosed, on November 23, 2020 and November 25, 2020, the Company received notices on behalf of Requisite Forbearing Noteholders and Requisite Forbearing Lenders consenting to an extension of the scheduled expiration time under each of the Notes Forbearance Agreement and the Credit Facilities Forbearance Agreement, respectively, to 8:00 a.m., New York City time, on December 14, 2020.
On December 9, 2020, the Company received notices on behalf of Requisite Forbearing Noteholders and Required Lenders consenting to an extension of the scheduled expiration time under each of the Notes Forbearance Agreement and the Credit Facilities Forbearance Agreement, respectively, to 8:00 a.m., New York City time, on December 28, 2020 (the “New Expiration Time”).
In addition, on December 10, 2020, the Company, GTT B.V. and certain guarantors of the obligations under the Credit Agreement entered into a Forbearance Extension Agreement (the “Forbearance Extension Agreement”) with Required Revolving Lenders and the Agent. The Forbearance Extension Agreement provides that Required Revolving Lenders consent to the extension of the Credit Facilities Forbearance Agreement to the New Expiration Time effective upon delivery of an irrevocable written notice by the Company permanently reducing the unused revolving commitments under the Credit Agreement (the “Revolving Commitment Reduction”) such that the total revolving commitments under the Credit Agreement shall equal approximately $85.7 million (the “Revolving Commitment Cap”), which represents the aggregate principal amount of revolving loans and letters of credit outstanding as of each of October 28, 2020 and the date hereof. The Company delivered such irrevocable written notice on December 10, 2020. In addition, the Forbearance Extension Agreement provides that, during the forbearance period, determinations under the Credit Agreement and other related agreements and documents of whether outstanding revolving loans and/or issued and outstanding letters of credit would exceed 30% of the revolving commitments shall be calculated based on the revolving commitments in effect as of October 28, 2020.
Prior to the entry into the Forbearance Extension Agreement, the Credit Facilities Forbearance Agreement had provided that the Company was not permitted to borrow revolving loans and/or request the issuance of letters of credit in excess of the Revolving Commitment Cap without the consent of each revolving lender. In addition, the Credit Facilities Forbearance Agreement had provided that the revolving commitments would be automatically and permanently reduced to equal the
Revolving Commitment Cap upon the end of the forbearance period (after giving effect to all extensions thereof) or the occurrence of certain other events. As a result, the Revolving Commitment Reduction did not impact the availability of revolving loans and/or letters of credit under the Company’s revolving credit facility.
The foregoing description of the Forbearance Extension Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Forbearance Extension Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.