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Global Crossing Divests IPC Trading Systems Units

Global Crossing Ltd. , which recently reported third quarter recurring adjusted EBITDA more than $50 million short of guidance it provided in early October, revealed a deal Monday that will raise the company $360 million in cash.

The Bermuda-based telecommunications provider said it will sell its IPC Trading Systems units -- picked up in June 2000 as part of its acquisition of IXnet -- to an investment group led by Goldman Sachs Capital Partners 2000 (GSCP), an affiliate of The Goldman Sachs Group Inc. IPC Trading Systems provides sophisticated desktop trading systems to the global financial community.

As part of the deal, Global Crossing subsidiary Asia Global Crossing will divest the Asia-Pacific assets and operations of IPC Trading Systems for $22.5 million of the proceeds. AX picked up its share of IPC's assets from Global Crossing following the parent's July 2001 acquisition of IXnet Asia. As part of the current deal, both Global Crossing and Asia Global Crossing sealed up six-year network agreements making them the preferred provider for all IPC's telecommunications needs.

"We expect IPC to thrive as an independent organization," said Greg Kenepp, president of IPC Trading Systems. "The transaction enables us to focus on our core business, providing customers with innovative solutions including the IQmx trading platform and premiere support services that help optimize performance in the trading environment.

Global Crossing indicated in its third quarter results, released Nov. 13, that it was shopping around for buyers for its IPC and Global Marine assets. The company had already discontinued operations for those segments, as well as its ILEC business and GlobalCenter.

The company also greatly expanded a restructuring it announced in October -- a restructuring which included major changes to the company's management -- increasing the number of jobs it plans to eliminate to 3,200.

The following day, Goldman Sachs & Co.'s Frank Governali, said that by his numbers, GX was barely funded through 2002.

"The divestiture of IPC, as well as other non-core assets such as Global Marine Systems, will strengthen our focus on becoming one of the world's leading telecommunications service providers, and at the same time improve our company's cash position," said GX and AX Chief Executive John Legere.

Following the transaction, which Global Crossing expects to close by year end, IPC will operate as an independent company with headquarters in New York and operations in all major financial centers around the world.

GX's and AX's advisors for the deal were JP Morgan Chase and UBS Warburg LLC.