GSI Group Inc. Equity Committee Urges Shareholders to Reject GSI's Reorganization Plan

BILLERICA, Mass., Feb. 1 /PRNewswire/ -- The Official Committee of Equity Security Holders of GSI Group, Inc. (Pink Sheets: GSIGQ) announced today that it unanimously recommends that GSI's shareholders reject the First Modified Joint Chapter 11 Plan of Reorganization for MES International, Inc., GSI Group Inc. and GSI Group Corporation.

Although the bankruptcy court approved GSI's disclosure statement for the plan on January 8, 2010, the Equity Committee discovered that GSI inadvertently failed to remove the legend on the cover of the disclosure statement that says the disclosure statement has not been approved by the bankruptcy court and should not be relied on.  While GSI was able to include a correction notice in the vast majority of the packages that will be delivered to equity holders, some holders will receive disclosure statements without the correction notice, which will be sent in a separate, later mailing to those holders.  Notwithstanding the language on the cover of the disclosure statement, shareholders should timely cast their ballots.

The Equity Committee urges shareholders to cast their ballots to reject the plan for the following reasons.

• The structure of GSI's reorganization plan was negotiated during the second quarter of 2009.  Since that time, the markets that GSI serves have improved dramatically.  The Equity Committee believes that the enterprise value of GSI significantly exceeds the enterprise value imputed by the current plan.
• The proposed plan implies an enterprise value for GSI of approximately $167 million.  For current shareholders of GSI, the proposed plan provides for distributed equity value (excluding the warrants) of approximately $28 million, equivalent to a per share price of approximately $0.60.  If shareholders vote to approve the plan, they would be agreeing with this valuation and would be authorizing GSI to dilute their ownership percentage by approximately 80%.  As representatives of the shareholders of GSI, appointed by the bankruptcy court, the Equity Committee urges all shareholders to reject the proposed plan and allow the Equity Committee to negotiate, or seek to separately pursue, an alternative plan of reorganization indicative of GSI's true value.

"We believe that the current plan significantly undervalues GSI and gives the noteholders a recovery on their claims substantially greater than what they are entitled to receive under applicable law," said Stephen W. Bershad, Chairman of the Equity Committee.  "We urge all shareholders to reject this plan as not being in the best interests of shareholders.  The Equity Committee is working to negotiate an alternative plan with the noteholders and GSI.  If these negotiations fail, the Equity Committee is prepared to challenge the proposed plan in bankruptcy court and may seek to propose and solicit its own plan of reorganization."

The Equity Committee urges all shareholders to carefully read the plan and the related disclosure statement that GSI has mailed to shareholders.  Most importantly, the Equity Committee urges shareholders to timely cast their votes to reject the plan.

Although GSI's materials state that the deadline for shareholders to return their ballots is Monday, February 15, 2010 (a Federal holiday), GSI has extended the deadline until Tuesday, February 16, 2010.  All ballots must be received no later than February 16, 2010.  To receive another disclosure statement or ballot, please contact the Debtors' solicitation agent, The Garden City Group, Inc., by telephone at 1-866-249-8112.  

This statements in this press release regarding the valuation of GSI reflect the views of the Equity Committee, and not GSI.  

SOURCE The Official Committee of Equity Security Holders of GSI Group, Inc.

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