360networks Inc., having emerged from bankruptcy protection earlier this month, said Monday it is buying GT Group Telecom Inc., which is now in the midst of a court-protected restructuring.
Financial terms of the deal weren't released, although they will be included in Group Telecom's reorganization plan.
"This agreement will achieve the best possible result for our customers, employees, and creditors," Dan Milliard, Group Telecom's chief executive officer, said in a statement. "
"...The combination will allow the highest number of our employees to remain with a growing company. And this agreement will produce the best possible recovery for our creditors."
Last week, Toronto-based Internet, voice and data network services provider Group Telecom, which filed for court protection in June, said it had been given court approval to accept a takeover bid but didn't specify the suitor.
Vancouver-based 360networks, meanwhile, announced earlier this month that it had successfully emerged from bankruptcy protection in both the United States and Canada, the long-suffering fibre-optic network builder and operator.
In its restructuring, 360networks said it has drastically reduced monthly expenses and will emerge with more than $100-million (U.S.) in cash. Its bank debt is now $215-million down from $2.7-billion before it sought protection from creditors in September 2001 after defaulting on part of the debt it ran up trying to build a worldwide high-speed data network.
The firm was one of the first telecommunications companies to ask for court protection as the technology sector collapsed after the late 1990s boom period.
"We are very excited about combining these two successfully restructured companies," Greg Maffei, 360networks' chief executive officer, said.
"GT is a leading telecom provider across Canada with tremendous strength in its 13,000 customers, skilled employees, innovative product set, and extensive metro network."
The deal, the two companies said, will not involve any significant recovery for the trade creditors of units GT Group Telecom Services Corp. and GT Group Telecom Services (USA) Corp., nor will it involve any recovery for the unsecured lenders or shareholders of GT Group Telecom Inc.
Group Telecom's court protection was extended last week until Dec. 11. The deal is expected to close in February.
Earlier thismonth, 360networks had said it and private equity firm WL Ross & Co. had joined forces to look at acquisitions in the telecom industry.
In Monday's announcement, 360networks said the purchase involved WL Ross & Co. providing a "backstop" for the cash required to complete the acquisition.