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
Richard W.
Global Crossing & the Art of Effective Campaign Contributions
It seems that Terry McAuliffe invested $100,000 in Global Crossing in the mid-80's that turned into $18,000,000! Didn't catch the details, except that McAwful had a relationship with one of the founders. I did a search, but couldn't find an online edition.
There was also a reference to an introduction McTerryble made to clintbilly that resulted in a big contribution to the demonrats.
If anyone can find that article, it would be GREAT!
Sorry to post this and leave, but my ballet class starts in 15 minutes.
Great heads-up thanks.
WSJ 11/16/99 "….Hong Kong conglomerate Hutchison Whampoa Ltd. said it is forming a $1.2 billion telecommunications and Internet joint venture with Bermuda-based Global Crossing Ltd. The joint venture will combine Hutchison's fixed-line network in Hong Kong with an international fiber-optic network that Global Crossing is laying across the world's oceans…… To finance its stake in the venture, Global Crosing will give Hutchison $400 million in convertible preferred stock, or a stake of about 1.3% in the company, which has a market capitalization of about $30 billion. It also will provide assets valued at $350 million and $50 million in cash to the venture, said Global Crossing Chief Executive Jack Scanlon….."
Will do some more digging.
With the help of Ron Brown and Energy Secretary Hazel O’Leary, Arco was also, at the start of the Clinton era, in the process of building refineries in China. Hence, Clinton’s overturn of the export ban was an immense boon to the company, whose chief executive, Lodwrick Cook, was given a White House birthday party in June of 1994. The birthday presents have continued ever since to the favorite oil company of the Clinton-Gore era.
Hmmm...interesting....this Lodwrick Cook?
Yup...none other than the current Co-Chairman of Global Crossing Ltd!
No Arkansas ties there...no sirrreeee...</ sarcasm>
Wish there was. There is little doubt that Greenspan was taking his marching orders from Robert Rubin for eight years. Rubin was pulling the strings and Greenspan was dancing. Rubin had already convinced Bubba that if he could inflate the economy, that he could get away with anything -- and he did. I really don't know if Greenspan was actually so dumb that he didn't know that he was being used, or if he willingly went along with the plan. Either way, Greenspan made Bubba look good and now Americans are paying a high price for the totally corrupt Clinton years.
Richard W.
Well don't get too comfortable with that story. If you remember, Bush Sr. took shares of Global Crossing in place of cash for a speaking engagement. Bush Sr. make millions also. I'm sure that will be all over the news tomorrow.
Richard W.
Sources familiar with the [Clinton] library fund-raising, being overseen by first friend Terence McAuliffe, said it has collected pledges of $20 million to $30 million...Global Crossing Chairman Gary Winnick has pledged $1 million...The library fund-raising is striking both for the gargantuan size of the pledges being made and the refusal -- at least so far -- to disclose the donors.
Thanks, i wasn't aware of the preexisting relationship...not that the deal smells any better...
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