Posted on 01/28/2002 10:37:55 AM PST by OliverWendellDouglas
Global Crossing Bankruptcy Steep Fall From Ambitious Start
By Christine Nuzum OF DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Global Crossing Ltd. (GX), the young telecommunications venture that spent $20 billion building a worldwide fiber-optic network, saw its once lofty ambitions to become a global carrier rivalling AT&T Corp. (T) fade even further into improbability as it filed for Chapter 11 bankruptcy protection Monday.
Hutchinson Whampoa Ltd. (H.HUW) and Singapore Technologies Telemedia Pte. Ltd. agreed acquire a majority stake in Global Crossing for $750 million, a sum that won't go far toward paying off its $9 billion in bank debt and bonds. The deal is subject to approval by Global Crossing's creditors. The bankruptcy filing listed $22.4 billion in assets and $12.4 billion in debts, making it the fourth largest bankruptcy filing ever.
Global Crossing's fortunes have collapsed since 1999, when it paid $10 billion in stock for Frontier Corp. and agreed to buy U S West for $30 billion, before Qwest Communications International Inc. (Q) won the deal with a larger bid. Global Crossing shares, which went public at $19 apiece in 1998 and traded above $60 in 1999 and the 2000, were halted at 30 cents Monday. The company's market capitalization was $266.6 million, down from a peak of a peak of $5.7 billion in July of 2000.
Founded by chairman Gary Winnick, formerly an aide of Michael Milken at Drexel Burnham Lambert, Global Crossing began leasing fiber on its trans-Atlantic network in 1997. Over the next four years, Global Crossing built cables connecting to Europe, South America and Asia. The company acquired a domestic long-distance network through its 1999 purchase of Frontier Corp., whose local telephone business was sold to Citizens Communications (CZN) two years later. However, Global Crossing was operating in an increasingly crowded field. Several other companies, including Level 3 Communications Inc. (LVLT), Tycom, now part of Tyco International Corp. (TYC), and the now bankrupt 360 Networks Inc. (TSIX), also built subsea cables to lease to carriers, eventually depressing prices.
In 1999, executives pitched the merger agreement with U S West as Global Crossing's ticket to competing with long-distance carriers AT&T and WorldCom Group (WCOM), then MCI WorldCom Inc. But Qwest launched added $5 billion in its hostile bid, and eventually won U S West.
With the purchase of Frontier Corp., along with smaller acquisitions of IPC Communications, IXNEt Inc. and the telecommunications branch of Racal Electronics PLC, Global Crossing aimed to expand its services beyond the souring business of leasing subsea communications links and into data communications services for large corporations.
Chief Financial Officer Dan Cohrs told Dow Jones Newswires that Global Crossing's sales of data services to such businesses is going well, but is "certainly a little less than we had hoped for at the time we did some of those acquisitions."
Global Crossing was burned over the last two years as the dried up funds among long-distance telecom carriers caused demand for leasing subsea communications links to evaporate. Meanwhile, the carriers that did want capacity were able to negotiate low prices between Global Crossing and its competitors
"The business that really has fallen off for us is the business of selling large chunks of capacity to other businesses," said Cohrs.
(MORE) DOW JONES NEWS 01-28-02 02:46 PM- - 02 46 PM EST 01-28-02
Sounds quite a bit like enron. Praytell, why no fireworks? Maybe the leftwing connection is just too real.
If this hasn't appeared as a separate post, it should!
Right or Left; Liberal or Conservative; big money corruption is equal opportunity. Crooks are crooks regardless of political affiliation. Few in Washington have clean hands. Our system has been totally compromised and most of our elected officials would sell out the best interests of the public and the country for a mere $100,000 contribution. Term limits is the only answer to the organized crime family that has taken over our government.
Richard W.
Yeah, I suppose that I've given that impression, but I am well aware of the media bias and how the RATS are throwing mud at GW just to see what sticks. Funny (or sad) thing is that Bush is more honest and his more integrity than the whole bunch who have loaded their pockets with dirty money from special interests. Notice I say special interests cause that what it used to be called. Not used in the media today cause it includes too many left wing groups such as unions, greenies, race baiters, lawyers etc.
Richard W.
Let it sink in. The left never plays fair.
ill do just that. thx.
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