Hutch, STT close in on cut-price Global Crossing


Global Crossing and its CEO, John Legere, have postponed the auction four times

Staff and reports

HONG KONG, China -- Reports on Wednesday indicate that Hutchison Whampoa and Singapore Technologies Telemedia (STT) are close to a deal for troubled telecoms firm Global Crossing.

But sources close to negotiators told Reuters Wednesday that the new deal was worth half of the original joint bid that the companies tendered in January.

Global Crossing postponed the deadline for bids in an auction of its assets for the fourth time to Thursday. The original deadline was July 24th.

The Bermuda-based company, which had a peak stock market value of $48 billion, filed for Chapter 11 bankruptcy protection in January with debts of $12.4 billion.

The Wall Street Journal reports that the deal would give the two Asian firms 62 percent of Global Crossing for between $250 million and $300 million in cash and $200 million in notes.

Bankers, who lent the company $2.55 billion, would get nearly all the cash, $175 million in notes, and 6% in equity. Bondholders would get $25 million in notes and the remaining equity.

And, like most Chapter 11 filings, existing shareholders get nothing.

The deal is worth considerably less than the $750 million that Hutchison and STT offered for 79 percent of the company in January.

"They should have done the deal then -- it would have made Hutch and STT look very stupid," a source told Reuters on Tuesday. "But now they just look very stupid themselves and make the two look good." (full story)

Investigations gather pace

Global Crossing is currently facing investigations into its accounting by both the U.S. Justice Department and the Securities and Exchange Commission, with investigators keen to interview founder and chairman Gary Winnick this week.

Spokesman Ken Johnson told Reuters "We have a long laundry list of questions for him to answer. We fully expect to have a hearing on Global Crossing this fall."

The WSJ says one of the items Winnick is expected to be questioned about is his sale of $123 million worth of stock in May 2001.

The sale came after a former accounting executive at the firm claimed that Global Crossing used improper accounting and "swaps" of fiber-optic capacity to falsely boost revenue last year.

Other bids ready for GC


Hutchison Whampoa boss, billionaire Li Ka-Shing, hopes to complete a cut-price deal for a company once worth $48 billion

Hutchison and STT's bid isn't the only one in the auction for Global Crossing.

Former executive David Walsh heads up a bid from a division of Bank One Corp., while Level 3 Communications and a joint bid from Gores Technology and Platinum Equity are also aiming to take control of Global Crossing's assets.

The company spent $7 billion to create a fiber-optic network that carries voice and data communication between 200 cities in 27 countries, and its assets are worth an estimated $22.4 billion.

It also owns 59 percent of Asia Global Crossing, which has been eyed by companies such as China Netcom and Purple Communications as an acquisition target.