Global Crossing gets US court approval for sale

Global Crossing Ltd, which supplies international telecoms capacity to Irish companies, has won approval from a US bankruptcy court to sell itself to two Asian investors in a bid to emerge intact from bankruptcy.

Under the terms of the deal, Hong Kong's Hutchison Whampoa and Singapore Technologies Telemedia take a 61.5 per cent stake in the US firm - whose estimated assets top $22 billion (€22.6 billion) - in return for about $300 million in cash and $200 million in notes. The remaining 38.5 per cent of the company is to be taken by banks and other creditors.

The price being paid is far less than the same consortium's original offer of $750 million for a 79 per cent stake rejected by creditors as too low an offer for that big a stake.

"At this point, all we have to say is we're very happy with the people investing in the company," Global Crossing chief executive Mr John Legere said yesterday after a bankruptcy court hearing.

Global Crossing employs 10 operational staff in the Republic but its corporate finance unit for its global operations is also based in the State and employs 60 people at its office in Ballsbridge.

It filed in January for what was then the fourth-largest bankruptcy on record, as it buckled under $12.4 billion in debt, falling prices and a glut of high-speed network capacity that it couldn't sell.

The company also faces investigations into its accounting practices by the US Justice Department, the Securities and Exchange Commission and Congress.

The deal agreed yesterday means the company can emerge from Chapter 11 as a going concern and would seem to have safeguarded the Irish Government's €126 million contract with the company to provide international telecoms capacity to the State.

Global Crossing was contracted by the Government in 1999 to lay an undersea cable connecting Dublin to its global telecommunications network, which connects 200 cities in 27 countries.

This enabled the Government to purchase cheap telecoms capacity and sell it on to telecoms firms such as Eircom.

As part of that contract, the Government paid €7.7 million earlier this year to Global Crossing, despite the fact that the group's future was in doubt at the time.

Last night, Global Crossing's European managing director, Mr Phil Metcalf, said the agreement with the two Asian investors left his company in a very strong position for the future, adding that he expected the group to emerge from Chapter 11 early in 2003.

Mr Metcalf said, despite the company's recent difficulties, it had continued to provide its service to the Republic and said plans to have a second point of presence in place in the Republic by November were well ahead of track, enabling a more comprehensive and reliable service.