Profile
A new
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.’
Although the company will get a new board
of directors, ‘our business strategies are
unchanged,’ Brak says. What then, can be
chapter
discerned of the shape of a post-recessionary
company such as GSI, when the restructuring is
complete and the markets start to recover?
As a result of its growth by acquisition, the
group is a large and very diverse supplier of lasers
and other photonics technologies. Hitherto, the
philosophy has been to operate the subsidiaries
as stand-alone businesses. Brak concedes that
Tom Wilkie asks how the GSI Group is coping with
management time has been distracted by the
need to manage the debt – leading to November’s
the recession, and focuses on its future plans announcement – and by an unrelated issue
regarding the reporting of certain financial results
T
he recession has ruined almost everyone’s month agreed a ‘debt for equity’ swap. The major that led to the company’s delisting from Nasdaq
plans. In all sectors of the economy, financial institutions that lent it the money will on 5 November.
confident strategies for expansion and now take a 74.3 per cent stake, reducing the debt But, he points out, there are synergies between
growth have had to be cut back and belts to $95m. A parallel agreement awards a major many of the subsidiary companies that the
tightened, as revenues fell and assumptions that creditor 7.1 per cent, leaving the pre-existing company should be taking advantage of, and the
looked so plausible, so certain, just 12 months shareholders with ‘diluted’ equity. Providing the different component parts of the whole group
ago have been confounded. arrangement is approved by the courts, they will need to work together more to offer complete
Last month, the laser industry had its own now have only 18.6 per cent of the company. solutions to their customers.
example of a major company fighting the chill The financial restructuring is complex. Some customers want components drilled, cut
winds of recession, with the news that on 20 Technically, only three of GSI’s corporate entities or welded – so they might go direct to GSI Lasers
November 2009 the GSI Group filed for Chapter – GSI Group Inc., the parent Canadian holding in Rugby, UK. But there is a growing trend across
11 protection against bankruptcy. It is a telling company, GSI Group Corporation and MES many industries, from electronics to automotive,
indicator of the effects of the slow-down in the for traceability of parts – sometimes down to
wider economy that this article does not start
Being first to market with
numbering and identifying each individual part
with a focus on the company’s fibre laser – so the same customer may also be looking for
technology, but on its financial engineering.
fibre laser systems is not one
a laser-marking system for the piece that is being
The company’s vision remains undimmed,
of the company’s priorities.
drilled, cut, or welded. They might therefore turn
despite the setback. ‘We are committed to making to Synrad, which makes marking and cutting
GSI a major player in the laser industry,’ says
Enhancing the company’s
CO
²
lasers.
Philippe Brak, vice-president and general
reputation for quality and
Synrad became part of the GSI Group as a result
manager of the GSI Group. The company’s chief of last year’s Excel Technology
executive officer, Sergio Edelstein, also
reliability is
acquisition. Synrad has a
emphasises the positive: ‘We will be well- long history in the laser
positioned to take advantage of business International, Inc. – have filed for business; started in
opportunities as our markets rebound.’ Chapter 11. The subsidiary operating 1984 it has delivered
The high technology sector has been badly companies – which include such more CO
²
lasers to
affected by the recession, and suppliers of laser famous names as Synrad and industry than any
systems have felt the effects particularly keenly Cambridge Technology, as well as
as large industrial companies have cut back on GSI Lasers in Rugby, England – are
their investments in new manufacturing plants. not part of the proceedings and will
It all looked so different back in July 2008, when continue to pay all vendors,
GSI announced a $360m takeover of Excel suppliers, employees and other
Technologies. The deal was intended to double obligations in the ordinary course of Philippe Brak,
GSI’s laser turnover and create a major force in business unaffected by the filings. vice-president and
the laser and photonics industry. Because agreement with the major general manager of
But the recession hit revenues, and GSI started lenders has already been reached, the the GSI Group.
to have difficulty in servicing the $210m debt company expects to emerge from Chapter
that it had taken on to make the acquisition. To 11 much faster than normal. Edelstein is
avoid defaulting on its loans, the company last upbeat about the development: ‘While GSI’s
8 lASer SYSTeMS eUroPe • issue 5 www.lasersystemseurope.com
LSEwin09 pp08-09 profile.indd 8 2/12/09 15:41:35
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