Bidders eye Asia Global Crossing optics


The East Asia Crossing network will wire the Pacific Rim with fiber-optics, but the builder's ties to its parent are complex

Alex Frew McMillan
CNN Hong Kong

HONG KONG, China (CNN) -- The bidding for a stake in Asia Global Crossing is reaching fever pitch, as the company nears the end of building its fiber-optic cable network.

Its East Asia Crossing will span the Pacific Rim, helping speed data of all kinds around the region.

That hard asset is drawing plenty of attention as California-based Asia Global Crossing sees its parent, Global Crossing Ltd., languishing in bankruptcy.

Asia Global Crossing confirms it has signed nondisclosure deals with 19 parties, normally a sign a company is opening its books to buyers or investors. But it also cautions that the process is in the early stages.

A 59 percent stake

Industry sources view the subsidiary as the jewel in the Global Crossing crown. Bermuda-based Global Crossing owns 59 percent of Asia Global Crossing. The parent entered Chapter 11 bankruptcy in January, to reorganize its business.

On Monday, it appointed three new board members to help to that end. They include Mike Ullman, who helped pull R.H. Macy and Co. through the same position.

He also serves on the board of luxury goods company LVMH and diamond merchant DeBeers.

Hong Kong-based Hutchison Whampoa has already partnered with Singapore Technologies Telemedia on a $750 million bid for the rest of Global Crossing that they do not already own.

But the parent is open to other offers, and sources say it is Asia Global Crossing they are really after.

A spat is also developing between Global Crossing CEO John J. Legere and the management of the subsidiary. Legere used to head the Asian operation before taking over the parent last October.

Looking for cash

Asia Global Crossing itself declared in February that it is looking for cash. It is at odds with its parent, which pulled out of a $400 million loan deal to the subsidiary.

Legere, who worked out of both Los Angeles and Hong Kong, is also reportedly annoyed that Asia Global Crossing has stopped paying his severance from the company. He officially left the subsidiary in January, but according to the New York Times, continued to receive bonus and severance payments.

Those have now stopped, the paper said.

Meantime, Asia Global Crossing is continuing to build its network. The company says it expects to add 100 sales jobs and 50 engineers, a substantial increase over its current headcount of 450.

Now a group of four bidders are readying a $250 million offer for a controlling stake in Asia Global Crossing, according to The Wall Street Journal, which did not identify them.

Japan's Softbank and Redmond, Washington-based Microsoft each own around 15 percent of Asia Global Crossing, whose stock is suspended in the United States because it does not meet trading requirements.