Last Call For Global Crossing

The deadline passed Thursday for bidders looking for assets on the cheap at
Global Crossing, a carrier knee deep in Chapter
11 bankruptcy trouble and looking for investors.

The deadline is the second one for potential bidders; in June, company
executives announced they would extend the original
June 20 deadline for new bidders in the hopes the extra time would give
them more options.

According to David Willis, vice president of global networking strategies
at the META Group, it’s a strategy that won’t likely produce more leads.

“Time is not on their side,” he said. “Unlike a WorldCom, where there is a
really attractive customer base, with Global Crossing that’s really not the
case. On a pure asset basis, there’s so many other assets on the market
today (to choose from).”

For the next 12 days, independent auditors will review and sort through the
Global Crossing asset bids for the closed-door auction, which will be
conducted July 24. If creditors and Global Crossing executives come to
agreement, the winning bids will be presented to the U.S. bankruptcy court
judge. The winner’s list is public and open for comment, which will then
be presented to the judge on July 26.

According to a Global Crossing spokesperson, the judge is free to strike
down any of the bids at his discretion, but “we would expect the Court
ultimately to accept the selection made by Global Crossing, the unsecured
creditors, and the banks.”

It’s a simple-sounding process that’s taken much longer than executives at
the troubled “carrier’s carrier” expected when they started restructuring
operations May 28. Since that time, the telcom industry has gone through a
meltdown, thanks largely to the continuing scandal at WorldCom (as well as Global Crossing itself, which has generated Congressional and Securities and Exchange Commission probes) and
financial troubles at Qwest Communications .

Willis said the state of the industry has made it nearly impossible for
Global Crossing to get more than pennies on the dollar for its
assets. What’s more, the potential pool of bidders — namely incumbent
telephone companies in the U.S. and abroad — is extremely shallow.

“It really comes down to in-country monopolies that want to make an
international play,” he said. “But buyers are very cautious to begin with
these days, and the tendency is for them to re-trench into their own local
monopolies — like Qwest,
for example.”

Overseas, it doesn’t look much better for potential Global Crossing
bidders. Many of the incumbent telephone companies already have an
international network plan in place or don’t have the money to buy one now,
said Frank Barbetta, senior analyst for global carriers at Probe Research.

“Deutsche Telekom and France Telecom, I don’t know if they really want to
invest at this time because of their own indebtedness matters,” he
said. “But even without that, France Telecom already owns Equuant, so
unless they need some particular routes, they won’t want to get (into the
bidding). Deutsche Telekom is building out its own worldwide network or
has options to get into a network.”

Barbetta said likely bidders overseas include Australian Telestra, Japan’s
Nippon Telegraph and Telephone Corp. (NTT) and British Telecom (BT).