FCC Approves Global Crossing Deal
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The Federal Communications Commission (FCC) approved Wednesday the transfer of bankrupt telecom Global Crossing's FCC authorizations and licenses to Singapore-based ST Telemedia (STT). With the approval, a newly constituted Global Crossing is expected to shortly emerge from bankruptcy.
STT is the majority owner of Starhub, Singapore's second largest telecom firm, and Indonesia's Indosat.
STT is investing $250 million for a 61.5 percent ownership position with Global Crossing creditors receiving a 38.5 percent equity interest.
Global Crossing controls nearly 100,000 miles of fiber optic submarine cables that connect 200 cities. According to Global Crossing, the system cost more than $15 billion to build.
The FCC found that the continued operations of Global Crossing, which is organized under the laws of Bermuda with principal offices in New Jersey, will benefit competition by preventing discontinuance of service and providing customers choices among providers of telecommunications.
The deal between Global Crossing and ST Telemedia was initially opposed by the FBI, CIA and the Pentagon, all of which have agencies that use Global Crossing's submarine network.
The national security objections of a foreign firm owning a network that carries key U.S. military and commercial traffic was overcome by ST Telemedia agreeing to guarantee American law enforcement officials access the network for investigations. In addition, members of the company's board of directors must be U.S. citizens who have obtained security clearances.
An earlier bid for control of Global Crossing by Hong Kong-based Hutchison Whampoa fel through when the company failed to meet U.S. national security concerns.
"Today's FCC approval is a major milestone -- the last regulatory requirement for our emergence from Chapter 11," said John Legere, Global Crossing's CEO.
Lee Theng Kiat, president and CEO of ST Telemedia, added, "Now we look forward to building on this progress to help expand and strengthen Global Crossing's business in the United States and worldwide. Upon emergence from bankruptcy, Global Crossing will be well positioned to continue integrating and building its services worldwide, and expanding its relationships with existing and new customers."
Last November, Asia Global Crossing Ltd., a majority-owned subsidiary of Global Crossing, and its subsidiary, Asia Global Crossing Development Co., commenced Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda. Earlier in 2002, Global Crossing Ltd. and certain of its subsidiaries (excluding Asia Global Crossing and its subsidiaries) filed for Chapter 11 protection.