Global Crossing Sells Network
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The bankruptcy court signed off on a bid for Global Crossing's fiber optic network Friday to an investment team from Asia.
The deal, approved by creditors last night signals the end of debate over who would take over the troubled carrier and the start of a major company overhaul plan, to be filed with the courts next month. Executives plan to emerge from bankruptcy in 2003.
Hutchinson Whampoa Ltd. and Singapore Technologies Telemedia Pte Ltd. have been in the run for Global Crossing's assets since earlier this year. The deal was struck outside the boundaries of the auction, which was scheduled for Wednesday and cancelled.
Executives were quick to allay any concerns created by the deal. Lee Theng Kiat, president and chief executive officer of Singapore Technologies, said customers don't need to worry about the network going dark during the transition.
Earlier this week, reports surfaced the Asian investors were the top contenders for Global Crossing's fiber network. Creditors had originally balked at the Asia investment bid because it was too low for an international long-haul data network.
The investment duo will have a 61.5 percent ownership stake in the new Global Crossing, well below the 79 percent stake the two originally sought. But the price of admission, $500 million, is also much lower than the $750 million originally put on the table.
According to Global Crossing officials, the remaining 38.5 percent of Global Crossing will go to creditors in the form of stock.
Global Crossing will retain ownership of three divisions -- conferencing, U.K. network and Global Marine. The 58 percent stake Global Crossing had in Asia Global Crossing (a former subsidiary) is also transferred to Hutchinson Whampoa and Singapore Technologies.