Globix Receives Acceptances from 97.5% in Principal Amount of Senior Notes Voted, Plans to Proceed with Pre-Packaged Reorganization; Reports Fiscal First Quarter Results
NEW YORK – February 15, 2002
NEW YORK – February 14, 2002 – Globix Corporation announced today that it has received, pursuant to its consent solicitation for the acceptance of its plan of reorganization, the required acceptances from holders of its senior notes and preferred stock for acceptance of the plan under Chapter 11 of the U.S. Bankruptcy Code. The plan was accepted by holders of senior notes representing approximately 97.5% of the $500 million principal amount of senior notes that actually voted and 97% in number of holders that actually voted. In addition, 100% of the preferred shareholders voted to accept the plan. The Company intends to commence Chapter 11 proceedings and file the plan under the Bankruptcy Code during the week of February 19, 2002, and expects to exit from bankruptcy by the end of March 2002, or as soon as practicable thereafter.
The financial restructuring under the plan will reduce significantly the principal amount of the Company’s outstanding indebtedness by approximately $480 million by converting a substantial portion of the Company’s indebtedness into new common stock. The Company’s bondholders will exchange the currently outstanding $600 million principal amount of senior notes for $120 million in new senior secured notes and approximately 85% of the reorganized Company’s new common stock. Current holders of the Company’s preferred stock will receive approximately 14% of the new common stock. Current holders of the Company’s common stock, and certain claims in respect thereof, will receive approximately 1% of the new common stock. All currently existing securities of the Company will be cancelled upon consummation of the plan.
Moreover, the new debt to be issued under the plan will permit Globix to satisfy interest payments in kind for at least two years and, at the discretion of the Company’s board of directors, up to four years, thereby eliminating a liquidity concern arising from current debt service obligations. The Company believes that the restructuring will substantially reduce uncertainty with respect to its future and better position it to attract and maintain new customers.
The Company intends to continue operating in Chapter 11 in the ordinary course of business. It intends to seek the necessary relief from the Bankruptcy Court to pay its employees, trade, and certain other creditors in full and on time, regardless of whether such claims arise prior to or after the Chapter 11 filing.
Peter Herzig, Chief Executive Officer, said, ‘We are pleased to have received such overwhelming support from both our bondholders and preferred shareholders to proceed with the plan. As we take these steps to secure the Company’s financial position, I am confident that we are doing all that is necessary to ensure a bright future for Globix. The successful execution of this plan will allow us to focus on developing Globix to its fullest potential as an industry-leading provider of hosting and advanced Internet services for enterprise businesses.’
In addition, today Globix reported financial results for its fiscal first quarter 2002 ended December 31, 2001.
Revenue for the first quarter of fiscal 2002 was $23.4 million compared to $26.2 million in the prior year quarter.
EBITDA loss (loss before net interest, income taxes, depreciation and amortization and restructuring charges) was $11.0 million for the first quarter of 2002 compared to $15.2 million in the same quarter last year.
During the first quarter of fiscal 2001, the Company recorded a restructuring charge of $38.1 million related to the modification of Internet data center expansion plans, and $2.3 million from the cumulative effect of a change in accounting principle.
For the fiscal first quarter of 2002, net loss attributable to common stockholders was $43.5 million, or $1.11 per share based on 38.9 million common shares. Net loss for the prior year quarter was $75.0 million, or $2.01 per share based on 37.3 million common shares, inclusive of the restructuring charge and the cumulative effect of the change in accounting principle.
As part of the Company’s continued effort to reduce expenses and work towards reaching the important goal of turning cash flow positive, the Company also reported that in recent weeks it has terminated approximately 30% of its workforce. The majority of those employees terminated performed functions related to providing internal services, peripheral client services and other functions not directly related to the Company’s core business.
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Globix is a leading provider of advanced Internet hosting, network and applications solutions for business. Globix delivers services via its secure state-of-the-art Internet DATA Centers, its high-performance global backbone and content delivery network, and its world-class technical professionals. Globix provides businesses with cutting-edge Internet resources and the ability to deploy, manage and scale mission-critical Internet operations for optimum performance and cost efficiency.