XO Details Offer for Global Crossing Telecommunications

Yahoo/Reuters ^ | 12 June 2003 | not given

[pttttt]

Yahoo! News   Sun, Jun 15, 2003

Thu Jun 12, 5:27 PM ET

NEW YORK (Reuters) - Regional phone company XO Communications Inc. (OTC BB:XOCM.OB - news) on Thursday sweetened its bid to acquire Global Crossing (Other OTC:GBLXQ - news) and said it is willing to bid for either the debt or the assets to take control of the bankrupt high-speed communications network operator.

XO, controlled by billionaire investor Carl Icahn, offered more than $700 million wholly in cash for Global Crossings assets or said it would buy any or all of its bank debt at $210 per $1,000 at face value, or a total of $472.5 million for its $2.25 billion in face value of debt.

Icahn, who controls more than 80 percent of XO's stock, on May 30 had offered more than $700 million for Global Crossing, or $250 million in cash and the rest in debt, stock and warrants.

However, Global Crossing has already agreed to be bought by Singapore Technologies Telemedia Ptd. in a deal that must be approved in bankruptcy court.

Icahn said the Global Crossing board continues to "ignore our bona fide purchase offer," which would be contingent on the canceling of the Singapore deal.

Some U.S. senators have questioned the Singapore deal, suggesting that there might be a national security risk if the Global Crossing assets should fall into foreign ownership.

Icahn took control of XO in January when it emerged from Chapter 11 bankruptcy.

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[pttttt]

Hutchison Whampoa, a company with Communist China connections, dropped out as a bidder, leaving Singapore Telecom, a frequent joint venture partner and an arm of the Singapore Government, as the sole bidder approved by the Bankruptcy Court. Singapore Telecom gets a 62% interest in a huge domestic-US and international carrier for $250M (peanuts compared to what it took to build the network). This is unprecedented in telecommunications history in developed countries. No country is known to have turned over this big a piece of their telecommunications infrastructure to a foreign government.

This is protecting neither the creditor interests nor national security. XO, a US company, is also offering more money; $700M.

[The Duke]

Well, trust the United States to do that which is simultaneously the most insane and the most self-destructive. They're battin' 300!

[BCrago66]

XO - that not the company swamping the Internet with pop-ups, is it?

[Paul_B]

My bet is that the ST deal gets cancelled. Icahn is win-win on this; even if the deal doesn't go through, he's brought invaluable attention to his fledgling company. He's declared himself a serious player in the consolidation game. Thus, XOCM jumped 33% in two days.

[Calpernia]

ST Telemedia's deal is a binding contract
with Global Crossing which means the bankrupt firm cannot consider a competing bid.

Can ST Telemedia actually acquire 61.5% stake in Global Crossings? Probably not. U.S. national security officials had put a halt at Hong Kong-based Hutchison's ties to China, and a ST Telemedia deal still would violate infrastructure security.