GTT to acquire Hibernia Networks

Business Wire

 • November 9, 2016

GTT Communications, Inc. (NYSE:GTT), the leading global cloud networking
 provider to multinational clients, announced today a definitive agreement to
 acquire Hibernia Networks, a leading provider of global, high-speed network
 connectivity solutions and owner of terrestrial and subsea fiber assets 
including Hibernia Express, the lowest latency transatlantic cable system.

The
 $590 million transaction consists of $515 million in cash and approximately
 3.3 million shares of GTT common stock, to be issued to the sellers at
 closing, valued at $75 million.

This strategic combination:

  • Adds breadth and depth to GTT’s global Tier 1 IP network with owned and
 leased dark fiber assets including five owned subsea cables and eight
 cable landing stations
  • Expands GTT’s cloud networking portfolio, composed of wide area
 networking, internet, managed services and voice services, with the
 addition of optical and low latency transport, video and CDN services
  • Adds a world-class video transport platform servicing content rights
 holders, broadcasters, cable companies and OTT providers
  • Grows GTT’s client base, adding marquee clients with depth in the
 financial services, media and entertainment, web-centric and service
 provider segments, which will remain strategic verticals of focus for
 GTT
  • Enhances GTT’s financial profile by adding a substantial, highly
 complementary recurring revenue business with strong cash flow
 characteristics

“This acquisition accelerates GTT’s growth strategy by expanding our
 portfolio of cloud networking services, significantly increasing the scope
 and power of our global network, and growing our multinational client base,”
said Rick Calder, GTT president and CEO. “Hibernia Networks has a
 demonstrated track record of growth, and brings unique, strategic network
 assets featuring high-bandwidth, low latency connectivity. We are very
excited to welcome Hibernia Networks’ clients and talented team members to
 GTT. Following our successful, proven acquisition template, we expect to
 complete integration within two to three quarters post-close, and to achieve
 a post-synergy multiple of seven times Adjusted EBITDA or better on a pro
forma basis.”

“GTT’s acquisition of Hibernia Networks provides great benefit to the
 entirety of our customer base as well as our two organizations,” said Bjarni
 Thorvardarson, Hibernia Networks’ chief executive officer. “GTT gains world
class global fiber assets, including ultra-low latency routes between key 
financial markets, as well as optical, low latency and content services, and 
exceptional employees with a proven track record of network and commercial
 leadership, and exemplary customer service. Hibernia Networks clients around
 the world will benefit from the expansive reach of GTT’s Tier 1 IP network,
 the broader portfolio of products and services, improved scale, and the 
company’s expertise in delivering cloud networking solutions and managed
 services to multinational clients.”

The parties expect to close the transaction by the end of first quarter
 2017, subject to certain regulatory approvals and other customary closing
 conditions.

The Bank Street Group LLC served as exclusive financial advisor to Hibernia
in connection with this transaction.

Transaction Financing



Under the terms of the agreement, the purchase price is $590 million,
 subject to customary adjustments for working capital and other items,
 composed of $515 million in cash, plus approximately 3.3 million shares of
 GTT common stock, to be issued to the sellers at closing, valued at $75
 million. The cash portion of the purchase price will be funded with proceeds
 from additional debt issuance, consisting of secured term loans as well as
 senior unsecured notes.

The debt syndication process will be led by KeyBank National Association and
 Credit Suisse, who provided committed financing for the transaction.

At closing, the ratio of total net debt to Adjusted EBITDA is expected to be 
approximately 4.5:1, using annualized pro forma combined third quarter 2016
 Adjusted EBITDA plus expected cost synergies. Within one year after closing,
 the ratio of total net debt to Adjusted EBITDA is expected to be at or below
 4.0:1, reflecting continued Adjusted EBITDA growth and cash generation.

Hibernia Financial Information

For the three months ending September 30, 2016, Hibernia reported, on an
unaudited basis, revenue of $45.5 million, Adjusted EBITDA of $16.1 million
 and capital expenditures of $1.9 million. For the nine months ending
 September 30, 2016, Hibernia reported, on an unaudited basis, revenue of
 $138.6 million, Adjusted EBITDA of $49.1 million and capital expenditures of 
$12.7 million. In 2015, Hibernia reported revenue of $148.9 million,
Adjusted EBITDA of $34.2 million and capital expenditures of $161.5 million.
 Revenue and Adjusted EBITDA growth from 2015 to 2016 is primarily driven by
 completion of the Hibernia Express low latency transatlantic cable system in
 September 2015, including the impact of certain prepayments for long-term 
indefeasible rights of use (“IRUs”) from anchor tenants. The results listed
 above are as reported by Hibernia Networks, without expected future cost 
synergies, and without any pro forma adjustments. Detailed Hibernia results 
and pro forma information will be made available in a Form 8-K within the
 next several weeks.

About GTT



GTT provides multinationals with a better way to reach the cloud through its
 suite of cloud networking services, including wide-area networking,
 Internet, managed services and voice services. The company’s Tier 1 IP
 network, ranked in the top five worldwide, connects clients to any location
 in the world and any application in the cloud. GTT delivers an outstanding
 client experience by living its core values of simplicity, speed and 
agility. For more information on how GTT is redefining global
 communications, please visit www.gtt.net.

About Hibernia Networks



Hibernia Networks owns and operates a global network serving more than 100
 markets and spanning 25 countries. Hibernia Networks serves customers with
 unparalleled support, flexibility and service in a variety of industry
 segments including financial markets, web-centric, media and entertainment,
 and telecom service providers. Providing enterprise-class and wholesale
 global connectivity solutions, Hibernia Networks offers secure and diverse 
optical transport, Ethernet and carrier-grade IP transit services. Hibernia
 Networks also offers dedicated cloud connectivity, low latency services, DTM 
and Hibernia CDN for seamless anytime, anywhere content delivery. Hibernia
 Express, Hibernia Networks’ transatlantic cable, provides the lowest latency
 connections available between major commercial and financial centers in
 North America, Europe and beyond. The state-of-the-art cable system garnered
 two Global Carriers Awards in 2015 — Subsea Project of the Year and Best
 Subsea Innovation, as well as the Global Telecom Business Innovation Award 
for 2016.