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Asian companies acquire majority interest in Global Crossing

Sun, 08/11/2002 - 8:00pm
Staff

Although at times it looked like a deal between Global Crossing Ltd. and two Asian conglomerates would never come to fruition, the companies have signed a definitive agreement that will give Hutchison Whampoa and Singapore Technologies Telemedia Pte. Ltd. a 61.5 percent majority interest in Global Crossing.

The $250 million investment will facilitate Global Crossing's emergence from bankruptcy-protection proceedings. Under the terms, Global Crossing's banks and creditors will receive 38.5 percent of the common equity in the reorganized company, plus $300 million in cash and $200 million of new debt in the form of senior notes. As in many telecom reorganizations, current shareholders will get nothing.

The $250 million investment will mostly likely assure Global Crossing's network will continue to operate, but is a far cry from covering what Global Crossing owes. When it filed for bankruptcy in January, the company listed $12.4 billion in liabilities. In April, Hutchison Whampoa and ST Telemedia made a $750 million offer for the company, but creditors balked at the bid saying it was too low.

A U.S. bankruptcy court approved the agreement on Friday. Global Crossing has canceled its asset auction scheduled for Aug. 14.

The companies expect to obtain regulatory approvals and meet other closing conditions early next year.

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