GTT Communications, a global enterprise and dark fiber provider, today announced that it has completed the sale of its infrastructure division, for an initial $1.74bn in cash, to I Squared Capital, an infrastructure private equity firm, which will rename the newly independent operating company EXA Infrastructure. Specifically, the infrastructure division consists of terrestrial fiber, subsea cables, and data centers in Europe and North America, as well as associated infrastructure services provided to customers.

While the “headline” purchase price of GTT Communications’ infrastructure division by I Squared Capital was $2.15bn, a number of purchase price adjustments (see below) lowered the aggregate consideration received by GTT Communications through the transaction.

EXA Infrastructure – I Squared Capital’s New Company

EXA Infrastructure, formerly GTT Communications’ infrastructure division, consists of:

  • Fiber network of 64k route miles (103k route kilometers) with over 400 points-of-presence (PoPs). Particularly, this network spans 31 metro areas and interconnects 103 cities across Europe and North America
  • Three trans-Atlantic subsea cables, including GTT Express (2.9k miles), GTT North/South (7.5k miles), and participation in Janna (394 miles)
  • 14 Tier-3 data centers – also 100+ colocation facilities

Finally, I Squared’s EXA Infrastructure will be led by Martijn Blanken. He was formerly an executive of Telstra and Boston Consulting Group (BCG).


I Squared Capital is purchasing GTT Communications’ infrastructure division through its flagship private equity vehicle, ISQ Global Infrastructure Fund III. Additionally, I Squared Capital notes that its equity syndication efforts are not yet complete, meaning that co-investors may participate with an investment in EXA Infrastructure.

Presently, I Squared Capital anticipates co-investors will, in aggregate, comprise 30% to 40% of the equity ownership of EXA Infrastructure.

Transaction Overview – GTT Communications, I Squared Capital

GTT Communications and I Squared Capital’s agreement stipulates that certain additional amounts will be paid following completion of the transaction. As a result, the “headline” purchase price of $2.15bn has been reduced by purchase price adjustments, holdbacks, and indemnification obligations.

Overall, adjustments to the purchase price of $2.15bn include:

  • Earn-Out: $130m maximum earn-out payment over a 5-year period based on achieving EBITDA targets of the near-net business. Specifically, this references long-term (i.e., 3+ year) fiber leases generated over new metro (intra-city) fiber assets, connecting additional enterprise buildings, data centers, towers, and military bases
  • Purchase Price Reduction: €20m ($24m) reduction to the overall Base Purchase Price
  • Deferred Consideration: €70m ($83m), but only released upon GTT Communications’ emergence from Chapter 11 bankruptcy. Particularly, the deferred consideration will be paid to holders of the company’s prepetition secured debt

Illustrative Infrastructure Transaction Net Proceeds – as of 8/31/2021 – but all $ in millions

Headline Purchase Price$2,150
(-) Earn-out(130)
Aggregate Base Purchase Price$2,020
(-) Escrow / Holdback(75)
(-) €20M Purchase Price Reduction(24)
(-) €70M Deferred Consideration(83)
(-) Estimated Fees, Tax & Others(136)
(-) Estimated Priming Term Loan Exit Fee(8)
(-) Proceeds Retained by Company for Liquidity(35)
Estimated Proceeds to GTT at Close$1,659
(+) €70M Deferred Consideration83
Aggregate Estimated Proceeds to GTT$1,742
Currency conversion overall is 1.18x EUR / USD spot rate.

Use of Proceeds

GTT’s infrastructure division sale to I Squared Capital enabled the company to repay an initial ~$1.68bn of its secured debt. Specifically, GTT repaid the following debt tranches:

  • Credit Agreement (KeyBank-led): repaid ~$1.39bn aggregate principal amount of overall secured debt obligations
  • Priming Facility Credit Agreement: aggregate payoff of ~$289m – also includes all accrued interest, fees, and prepayment premiums

GTT Communications – RemainCo Business

Following divestment of its infrastructure division, GTT Communications is now a managed services provider. Presently, the company’s strategy centers on serving enterprises with cloud networking services across a range of wide area network (WAN) connectivity options. Specifically, this includes GTT’s Tier 1 global IP network, SD-WAN, Ethernet, MPLS, SIP Trunking, and security.

Transaction Advisors – GTT Communications, I Squared Capital

Firstly, GTT Communications’ financial advisors were Credit Suisse and Goldman Sachs. Additionally, GTT Communications’ legal advisor was Goodwin Procter.

Secondly, I Squared Capital’s financial advisor was Morgan Stanley. Additionally, I Squared Capital’s legal advisor was Linklaters.

Jonathan Kim covers Fiber for Dgtl Infra, including Zayo Group, Cogent Communications (NASDAQ: CCOI), Uniti Group (NASDAQ: UNIT), Lumen Technologies (NYSE: LUMN), Frontier Communications (NASDAQ: FYBR), Consolidated Communications (NASDAQ: CNSL), and many more. Within Fiber, Jonathan focuses on the sub-sectors of wholesale / dark fiber, enterprise fiber, fiber-to-the-home (FTTH), fiber-to-the-premises (FTTP), and subsea cables. Jonathan has over 8 years of experience in research and writing for Fiber.


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