GSI Group Finalizes Agreement With Noteholders To Significantly Reduce Its Debt

BEDFORD, Mass., Nov. 20 /PRNewswire-FirstCall/ -- GSI Group Inc. (GSIG.PK) today announced that it has finalized an agreement with a majority of its noteholders on a restructuring plan that will enable the Company to significantly reduce its outstanding debt, enhance liquidity and position the Company for future growth.

Under the terms of the agreement, substantially based on the term sheet announced on June 30, 2009, the Company will exchange its $210 million principal amount of 11% Senior Notes for (a) a new $95 million secured loan due August 2014 and (b) common stock representing approximately 74.3% of the Company's post-consummation equity ownership. The Company has entered into a plan support agreement with beneficial owners holding more than 81% of the outstanding aggregate principal amount of the 11% Senior Notes and representing more than 70% of all noteholders.  

Funds affiliated with Goldman Sachs Asset Management, Tennenbaum Capital Partners, LLC and Highbridge Capital Management, LLC together are expected to own the majority of the equity of the reorganized company.

Following consummation of the restructuring plan, GSI will reduce its debt to third parties by $115 million, from $210 million today to $95 million. The restructuring will significantly reduce the Company's interest cost, and no principal payments will be required for four years.

To implement the pre-arranged restructuring, three of GSI's corporate entities -- GSI Group Inc., the parent Canadian holding company; GSI Group Corporation; and MES International, Inc., a non-operating subsidiary of GSI Group Corporation -- have filed voluntary petitions for Chapter 11 reorganization under the U.S. Bankruptcy Code in U.S. Bankruptcy Court in Wilmington, Delaware. No other subsidiaries and no subsidiaries outside of North America are included in the filing.  Going forward, GSI's operating subsidiaries will continue to pay all vendors, suppliers, employees and other obligations in the ordinary course of business unaffected by the filings.

"We are very pleased to have finalized a plan that will allow us to substantially reduce our debt and put GSI in a stronger, financially healthier position for the future," said Sergio Edelstein, Chief Executive Officer of GSI. "While GSI's debt has to be restructured as a result of the protracted economic downturn, the Company remains operationally strong with adequate cash on hand to meet its operational needs."