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GSI Group Inc. Announces Refinancing Of Debt

BEDFORD, Mass., Oct. 19, 2011 /PRNewswire/ --   GSI Group Inc. (NASDAQ: GSIG) (the "Company" or "GSI"), a global leader and supplier of laser-based solutions, precision motion controls and technologies, and semiconductor systems to global industrial, electronics, medical, and scientific markets, announced today the refinancing of all of its outstanding 12.25% Senior Secured PIK Election Notes due 2014 through the proceeds from a new $80 million senior secured credit agreement, with Bank of America, N.A., as Administrative Agent, Silicon Valley Bank, as Syndication Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Sole Lead Arranger and Sole Book Manager, and HSBC.    

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"We are very pleased to announce the completion of our debt refinancing, which was a major item on our strategic agenda for 2011 and represents an important step forward for the Company," said John A. Roush, Chief Executive Officer of GSI Group Inc.

The Credit Agreement provides for a $40 million, 4-year, term loan facility and a $40 million, 4-year, revolving credit facility and matures in 2015.  The Company's cash balance as of the end of the third quarter of 2011 was approximately $51 million.  The Company borrowed $73.1 million under the new senior secured credit facility to repay in full the outstanding principal of 12.25% Senior Secured PIK Election Notes.  

This refinancing is expected to substantially reduce the Company's interest expense, while extending the maturity of its principal debt.  The Company expects annual interest cost of approximately $2.3 million on $73.1 million of debt, which provides for roughly $6.7 million in interest cost savings.  Along with the July 2011 pre-payment of $35 million of the 12.25% notes, the refinancing is expected to save nearly $10 million per year in interest from the run rate at the beginning of this year.   Outstanding borrowings under the Senior Credit Facility will bear interest at a rate per annum equal to LIBOR plus an initial spread of 275 basis points through March 31, 2012, subject to adjustment thereafter based on the Company's consolidated leverage ratio.

In addition, the new Senior Credit Facility allows the Company to draw upon a $40 million committed Revolving Credit Facility and a $25 million uncommitted incremental facility, subject to the satisfaction of certain customary covenants.    

"Our new credit facility substantially lowers our financing costs, greatly improving our overall capital structure, and provides the Company with additional flexibility to execute on our strategic initiatives," said Robert Buckley, Chief Financial Officer for GSI Group Inc.  "In addition, this new credit facility reflects the significant progress the Company has made this year and the support we are seeing from the financial community and our lending institutions."

Safe Harbor and Forward Looking Information

Certain statements in this release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements contained in this news release that do not relate to matters of historical fact should be considered forward-looking statements, and are generally identified by words such as "expect," "intend," "anticipate," "estimate," "plan," and other similar expressions. These forward-looking statements include, but are not limited to, statements related to: the expected effect of the refinancing on the Company's interest expense; the expected impact of the refinancing on the Company's ability to execute its strategic initiatives; the Company's optimism regarding its prospects for the future; and other statements that are not historical facts.

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