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Global Crossing Restructures SWIFT Deal

Struggling voice and data carrier Global Crossing is restructuring a network services agreement with one of its most valuable customers. On Tuesday, Global Crossing and SWIFT, the banking industry's wire transfer backbone, said they signed a memorandum of understanding to restructure their agreement.

"Our new agreement with SWIFT aligns with our goal to become the world's most focused, cost-competitive data communications providers," said John Legere, chief executive officer of Global Crossing. "To do so, we are emphasizing our core services which deliver higher margins and have more immediate positive impact on our cash position and financial results. We look forward to continuing to serve SWIFT under the restructured agreement signed today."

Details as to how the two restructured the agreement were not forthcoming. Global Crossing originally sealed its deal with SWIFT in February 2001.

Under that deal, SWIFT -- whose 7,000 customers send out more than five million messages valued at an estimated $5 trillion every business day -- agreed to sub-contract its network operations to Global Crossing. Global Crossing was to manage the development and operation of SWIFT's Secure IP Network (SIPN) infrastructure as a Virtual Private Network (VPN) within its existing IP extranet infrastructure. Global Crossing also took responsibility for maintaining SWIFT's existing X.25 network with the goal of replacing it with the SIPN.

The deal was worth a minimum of $300 million to Global Crossing, though the company expected to realize between $500 million and $600 million from the network side alone.

However, since then, Global Crossing has fallen on hard times. The company filed for bankruptcy in January. Since then, it has been forced to sell many of its assets and cut a large number of jobs. It has also become the subject of a Securities and Exchange Commission (SEC) probe, and Congressional questioning concerning its accounting practices.