Ax Drops On Global Crossing Assets
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Global Crossing Inc., executives announced Friday a sweeping range of cutbacks to shore up mounting losses and increasing debt.
The drawdown is expected to save the company hundreds of millions of dollars, from $1.5 billion in 2001 to $900 million at the end of the year. Capital expenditures will be slashed from $3.2 billion down to $200 million in its non-Asian operations (Global Crossing is a majority shareholder of Asia Global Crossing, which is also experiencing financial difficulties).
The company is cutting 1,600 jobs by the end of the month, in addition to the 800 voluntary employee cuts already announced and selling off 71 offices executives consider outside their core business strategy.
Executives also agreed to take a pay cut to shore in costs, and a variety of programs will be discontinued as the company looks for a way to escape its Chapter 11 bankruptcy.
The company is currently under investigation by the Securities and Exchange Commission over concerns finance officials and its auditor, Arthur Andersen (of Enron fame) were cooking the books to mislead investors.
John Legere, Global Crossing chief executive officer, who gave himself an immediate 30 percent pay cut, said the initiatives are the third phase in the carrier's plan to get out of bankruptcy, and were long expected.
"At the end of the restructuring process, we will emerge a lean, tightly integrated organization with world-class productivity and an ability to quickly scale up as demand increases," he said.
Global Crossing has spent the past six months dumping non-essential businesses from its portfolio, further reducing expenses and bringing cash into the coffers. The latest, the sale of its trading system to Goldman, Sachs & Co., netted the carrier $360 million.
Some experts think Global Crossing is getting ready for a sale, with rumors abounding of a bid by Gores Technology, a buyout and turnaround specialty company. Hutchinson Whampoa has already put a bid of its own with the bankruptcy court.