Icahn Targets Global Crossing
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When billionaire financier Carl Icahn acquired 80 percent of Reston, Va.-based XO Communications and led the debt-ridden broadband telecom out bankruptcy in January, he said the company would not be timid about growth. He proved that Friday afternoon with a $700 million bid for bankrupt high-speed telecommunications firm Global Crossing.
XO's offer is comprised of $250 million in cash, $200 million of new 11 percent secured notes secured by all of the assets of Global Crossing, $200 million junior preferred stock in New Global Crossing, a 100 percent owned subsidiary of XO, and 15 million 5-year warrants to acquire stock in XO at $10 per share.
Global Crossing already has a $250 million offer for a 61.5 percent stake in the company from Singapore Technologies Telemedia. Long distance carrier IDT has also said it was prepared to make a $255 million cash offer for Global Crossing but has yet to make a bid.
"It is our intent to provide each of Global Crossing's banks and bond claim holders with the same amount of cash and new notes as in the current plan, and to increase the equity consideration received by each by over $50 million," Icahn said Friday in a prepared statement. "In addition, our proposal can close without regulatory headaches or financing contingencies and provides tremendous synergies between the two organizations that can benefit both Global Crossing's creditors and XO shareholders."
Global Crossing filed for bankruptcy in January 2002 with $12.4 billion in debt and $22.4 billion in assets. Once one of the high flying stocks of the 1990's tech boom, the company spent more than $20 billion to build fiber optic lines across both the Atlantic and Pacific oceans. As other competitors moved into the market for high-speed data transmission, Global Crossing sank in a flood of excess fiber optic capacity.
Icahn thinks Global Crossing's international network will fit nicely with XO's domestic network. XO's services include local and long distance voice, Internet access, virtual private networking, Ethernet, Web hosting and integrated voice and data services.