IP: Global Crossing Files Bankruptcy, Gets Investment

[David Farber <dave () farber net>]

http://www.nytimes.com/reuters/technology/tech-telecoms-globalcrossing.html

auto-abstract

PHILADELPHIA (Reuters) - Global Crossing Ltd. (news/quote) on Monday said 
it filed for bankruptcy protection as business partners in Asia agreed to 
pay $750 million in cash to assume control of the high-speed communications 
services company as it reorganizes in the fourth-largest insolvency in U.S. 
history.

The Chapter 11 reorganization by Global Crossing (GX.N), which had been 
widely expected, will leave its existing common and preferred shareholders, 
including founder and chairman Gary Winnick, with nothing.

It is a very painful decision, a very difficult one because the company 
will emerge stronger, but some constituents -- including management, 
including our main shareholder who is our chairman -- will not participate 
in the restructured company,'' Global Crossing Chief Executive John Legere 
said in an interview.

Global Crossing said its worldwide operations would be unaffected by the 
bankruptcy filing and customers would continue to have service.

Global Crossing is the latest emerging telecommunications company to 
stumble under a high debt load and flagging stock price.

Global Crossing struggled with the debt incurred from building its global 
network, which links more than 200 major cities in 27 countries.

The one-time Wall Street darling suffered further from a glut of 
fiber-optic network capacity, slack demand, and declining rates for voice 
and data transmission services, particularly on its undersea routes.

Global Crossing refused to provide details on the $750 million investment 
proposal, citing a confidentiality agreement with the investors.

Legere said the company will negotiate with its creditors to determine how 
much of the $750 million they will take and how much will remain with the 
company.

It said it does not expect Global Crossing's bankruptcy filing to have any 
immediate effect on its internal operations or customer service.

Asia Global Crossing also said it failed to meet listing standards for the 
New York Stock Exchange and has hired Lazard Freres & Co. LLC to help weigh 
financing and restructuring options.

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