Global Crossing Finally Sold

Much ado about nothing. That sums up all the back and forth, the slips of the tongue, the canceled deals and postponed auctions for Global Crossing Holdings Ltd. It turns out it's being bought by the exact same companies that tried to buy it right after it filed for bankruptcy in January (see Global Crossing Finally Sells).

After postponing the auction for the company’s assets six times in the past months, Global Crossing announced today that it had finally canceled the auction and sold its network to the original bidders: Hutchison Telecommunications (Hong Kong) Ltd. (owned by Hutchison Whampoa Ltd.) and Singapore Technologies Telemedia Pte. Ltd. (STT) (see Global Crossing's Asset Limbo).

Both the price and the structure of the deal have changed substantially since the original offer. Hutchison and STT are now proposing to invest $250 million for a 61.5 percent stake in the company. In January, the consortium offered $750 million for 79 percent, but the company’s creditors rejected the offer in May, hoping to get more for the fiber optic network that cost $7 billion to build out (see GlobalX Talks Fall Through and Global Garage Sale Coming? ).

The company’s banks and creditors will hold on to the remaining 38.5 percent of Global Crossing and will get $300 million in cash and $200 million in bonds. And the banks, which have lent the company more than $2.5 billion, are getting a far better deal than the company's other creditors. According to a Global Crossing spokesperson, the banks will get all the cash and $175 million of the bonds in the restructuring. The current shareholders of common stock in the company will be left with... well, nothing.

The deal has been approved by Global Crossing's creditors and the bankruptcy court in the Southern District of New York, but the company doesn't expect to reemerge from bankruptcy until early next year.

“Many bids were received,” says John DeBellis, a spokesperson for Global Crossing. “Global Crossing chose the one which best met the needs of a global telecommunications company with a worldwide IP network.”

The network links 200 cities in 27 countries. At its height, Global Crossing’s stock was worth $48 a share (see Global Crossing Falls Overboard).

When Global Crossing filed for the fifth largest bankruptcy in U.S. history on January 28, the company was loaded down with more than $12 billion in debt.

According to a company press release today, the new agreement will allow Global Crossing to retain its U.K. national business, its conferencing division, and Global Marine, three businesses it had previously considered selling to bring in some much needed cash.

Global Crossing is expecting to emerge from the Chapter 11 process early next year, and, according to a fact sheet on its Website, the company expects that it will remain a separate entity, with Hutchison and STT as the controlling shareholders.

— Eugénie Larson, Reporter, Light Reading
http://www.lightreading.com