Cases & Deals

Official committee of equity security holders of GSI Group achieves substantial improvement in recovery for existing equity holders

Client(s) Official committee of equity security holders of GSI Group

Jones Day represented the official committee of equity security holders ("Committee") in GSI Group's chapter 11 proceedings in Delaware. GSI is a manufacturer of photonics-based solutions consisting of lasers, laser systems and electro-optical components. The Committee included Stephen Bershad, a JEC Capital Partners fund (controlled by Peter Heiland) and Brad Radoff. The Committee members collectively held approximately 30% of the equity, which is publicly traded.

The Debtors filed their chapter 11 cases on November 20, 2009 with a plan and disclosure statement that was negotiated with the holders of the Debtors' $210 million of unsecured notes, which is the only debt other than a relatively small amount of trade debt. The prenegotiated plan contemplated that the noteholders would receive new secured PIK notes of $95 million and approximately 80% of the equity in the reorganized entity. After extensive litigation in connection with a contested confirmation hearing and further negotiations between the parties, a consensual plan of reorganization was confirmed on May 27, 2010. The consensual plan, which became effective in July 2010, permitted existing stockholders to retain approximately 49% of existing equity prior to giving effect to a rights offering. Following the completion of the rights offering under the plan, existing equity holders retained approximately 86% of the stock of the reorganized company. The existing noteholders received, among other things, the cash proceeds from the rights offering, plus $10 million in cash and new secured PIK notes of approximately $107 million, depending on the level of subscription to the rights offering.