M&A

20 November, 2009

UPDATE 2-GSI Group files for Ch. 11, creditors to take control

* Files pre-packaged bankruptcy

* Units outside North America not included in filing

* Lists assets of $555 mln and debt of $370 mln

* Vendors and suppliers to be paid in full (Recasts; adds details)

Nov 20 (Reuters) - GSI Group Inc (GSIG.PK), a supplier of precision technology and semiconductor systems, filed for bankruptcy protection in a Delaware court on Friday as part of a pre-arranged plan that would hand over control of the company to certain creditors.

Funds affiliated with Goldman Sachs Asset Management, Tennenbaum Capital Partners LLC and Highbridge Capital Management LLC together are expected to own a majority stake in the reorganized company, GSI said in a statement.

The company said it will exchange its $210 million senior notes for $95 million secured loan due August 2014 and about 74.3 percent of its equity, GSI said in a statement.

"While GSI's debt has to be restructured as a result of the protracted economic downturn, the company remains operationally strong with adequate cash on hand to meet its operational needs," Chief Executive Sergio Edelstein said.

As of Oct. 31, the company said it had cash and cash equivalents of about $57 million and about $14 million of auction rate securities at fair market value.

GSI added that the restructuring deal provides for all vendors and suppliers to be paid in full and that its subsidiaries outside North America were not included in the filing.

In its Chapter 11 petition, the company listed total assets of $555 million and total debt of $370 million, as of Nov. 6.

The company had earlier restated results for fiscal years 2004 through 2008, following a review of sales transactions in its semiconductor systems segment and other sales transactions.

Earlier this month, GSI was delisted from Nasdaq for failing to comply with its listing requirements.

The case is In re: GSI Group Inc, U.S. Bankruptcy Court District of Delaware (Delaware), No. 09-14110. (Reporting by Santosh Nadgir, Ajay Kamalakaran and Supantha Mukherjee in Bangalore; Editing by John Stonestreet, Anne Pallivathuckal)

Source: http://www.reuters.com