More Than 60 Courting Global Crossing
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Despite bankruptcy and a regulatory probe into Authur Andersen-related accounting practices, high-speed voice and data carrier Global Crossing Ltd. Wednesday said more than 60 potential investors expressed interest in company as it implemented cost cutting measures in the first quarter.
More than 50 of those interested parties became public in April as the result of an e-mail SNAFU.
The identities of the companies, which had expressed confidential interest in acquiring Global Crossing, were revealed in an e-mail message from the telecom's attorneys.
The message was sent by an employee of Weil, Gotshal & Manges to potential bidders on March 28. While it only included information on bidding procedures, the e-mail copied the e-mail addresses of more than 50 recipients at the top of the message.
Hong Kong's Hutchison Whampoa and Singapore Technologies Telemedia have already signed letters of intent to bid for the company.
Global Crossing also said Wednesday that its cost cutting efforts have been continuing. It laid off 2,000 employees during the quarter and closed 181 offices. It plans to close another 217 offices by year-end. In all, the company said its cost cutting initiatives are expected to reduce operating expenses in 2002 by $900 million.
"We were able to reduce operating costs significantly during the first quarter, although the choices were often difficult," said John Legere, chief executive officer of Global Crossing. "We realize this has been a painful time for former employees, and a challenging time for those employees who remain in place and continue to work harder than ever to turn our business around."
The company also said Wednesday it expects to report consolidated revenue of about $788 million for continuing operations in first quarter 2002, including service revenue of about $754 million. It also said it expects to report a cash balance of $894 million as of March 31, 2002, including $485 million unrestricted cash, $355 million restricted cash and $74 million from Global Marine. The number excludes $350 million of Asia Global Crossing cash.
Meanwhile, Global Crossing said it is continuing to work with creditors and potential investors to develop a plan of reorganization to restructure about $8 billion of claims.
"On March 8th, we released information describing our plans to restructure and streamline our business operations," said John Legere, chief executive officer of Global Crossing. "As part of this turn-around strategy, we made a commitment to keep our customers, employees and the business community updated on the state of our business. We continue to fulfill that commitment, and are pleased to report today that Global Crossing's overall performance for the first quarter of 2002 was well in line with the goals contained in the operating plan that we had previously presented to our creditors. We said we would aggressively restructure costs and cash management and we did so -- without compromising service or quality."
The company reported that it signed 475 new service agreements during the quarter, including renewals and new business. Among the companies that have renewed contracts with Global Crossing in the quarter are Techtel, Radiant, OPEX and CNBC Europe. New business includes Convergia, FAPESP, Agnostic Media, Club Med, Washingtonpost-Newsweek Interactive, Jabil, NBC News Channel, DANTE, Nextel Argentina and ABZ Ingenieros.
"In a very difficult market and during a very challenging time for Global Crossing, our sales teams and sales support personnel kept their focus on ensuring that our existing customers were well served and satisfied," Legere said. "This effort paid off in our low customer turn-over rate and high number of renewed contracts. As we predicted, new sales slowed on a relative basis during our restructuring effort; however, we are very pleased to have signed up some valuable new customers."
Finally, the company announced Wednesday that Joseph P. Clayton resigned from its board, citing the demands of his other professional responsibilities.