Two Asian companies that failed in a previous bid to buy Global
Crossing after it filed for bankruptcy in January have succeeded in
obtaining a majority investment in the company in a deal valued at
$750m (£492m), Global Crossing announced last week.
Hutchison Telecommunications, a subsidiary of Hutchison Whampoa, a
Hong Kong conglomerate, and Singapore Technologies Telemedia (STT)
are investing $250m combined to take a 61.5% majority interest in
Global Crossing.
The deal was approved at a New York District Court on Friday and
also won support from Global Crossing's creditor groups, the
company said.
Under the terms of the deal, Global Crossing's creditors and banks
will get 38.5% of common equity in a reconstituted company, $300m
cash and $200m in new debt in the form of senior notes.
The investment in the company plus the offer to the creditors add
up to $750m. The company will keep its national UK business,
conferencing division and Global Marine, which consists of three
businesses it had considered selling to bring in cash.
Customers of those businesses and other customers should expect
uninterrupted service, the company said.
A previous offer from Hutchison and STT, also valued at $750m, was
rejected by creditors in May. The company listed assets of $12bn
and liabilities of $22bn when it filed for bankruptcy.
Global Crossing, which operates an extensive undersea fibre-optic
cable network, still has to submit a plan for reorganisation under
Chapter 11 of the US bankruptcy law, which must be approved by the
court.
That plan is expected to be filed next month and the company has
forecast that it will emerge from bankruptcy early next year.
Global Crossing is one of a number of IT and telecommunications
companies under federal investigation in the US and is frequently
mentioned by lawmakers advocating reform of business and accounting
practices.
The company is under investigation by the US Securities and
Exchange Commission and the Department of Justice, as well as the
House Committee on Energy and Commerce and the House Subcommittee
on Oversight and Investigations.
The first three are looking into Global Crossing's accounting
practices, while both of the house committees have demanded
documents and access to employees in an investigation trying to
determine whether documents were shredded.
An internal investigation found that allegations of document
shredding were unsubstantiated, Global Crossing executives have
said. The company has pledged full co-operation in the
investigations.