Asian companies seeking to acquire Global Crossing unable to reach agreement with creditors
Sunday, May 26th 2002, 12:00 am
By: News On 6
NEW YORK (AP) _ The two Asian firms seeking to acquire Global Crossing have failed to reach an agreement with lenders who are owed more than $12 billion by the bankrupt communications company.
The failed negotiations with Hutchison Whampoa Ltd. and Singapore Technologies Telemedia Pte. Ltd., announced Saturday by Global Crossing, means that the ailing company's global fiber-optic network will be put up for auction by the federal bankruptcy court handling the case.
A deadline for the talks had been extended until Friday by Judge Robert E. Gerber of the Bankruptcy Court of the Southern District of New York at the request of the creditors and the two Asian firms.
Creditors were looking for Hutchison and Singapore Technologies to improve on their combined bid of $750 million for a 79 percent stake in Global Crossing, an offer that was first announced in conjunction with the bankruptcy filing back in January.
Under the plan, creditors would have received about $300 million and the remaining 21 percent equity in Global Crossing.
The two Asian firms are expected to participate in the bankruptcy auction, which is currently scheduled for July 8. Bids are due by June 20.
``While we are disappointed that an agreement could not be reached at this time, we look forward to working with Hutchison Whampoa and Singapore Technologies Telemedia as the auction approaches,'' said John Legere, Global Crossing's chief executive, in a statement.
However, Global Crossing also said it is continuing discussions with other interested potential investors. More than 60 other parties have expressed interest in buying all or part of the company's assets.
Most of Global Crossing's debt comes from building the world's most extensive fiber-optic system, a 100,000-mile network that connects more than 200 cities in 27 countries around the world.
The Bermuda-based firm had hoped to dominate the market for high-speed data communications, and at one point, enthusiastic investors boosted the company's value to nearly $50 billion.
But before long, a glut of network capacity combined with the collapse of the Internet bubble led to a steep drop in revenues. On Jan. 28, Global Crossing filed for Chapter 11 bankruptcy protection with debts of $12.4 billion, making it the fourth-largest bankruptcy case in U.S. history.
Since the bankruptcy filing, the company and its top executives have been besieged by charges of deceptive accounting.