Global Crossing heading for auction as talks breakdown

ITworld.com |  Networking

Talks between two Asian telecommunication companies and the creditors of bankrupt international data network operator Global Crossing Ltd. have broken down after the two sides were unable to agree on a purchase deal.

The companies, Hong Kong's Hutchison Whampoa Ltd. and Singapore Technologies Telemedia Pte. Ltd., were offering creditors US$750 million for a majority stake in the carrier. The creditors however were trying to secure more money in return for the company, which listed US$12 billion in assets and $22 billion in liabilities in its bankruptcy filings in the U.S. District Court for the Southern District of New York.

With the breakdown of talks, the assets of Global Crossing are set to be sold at auction. The company operates a fiber-optic network that touches 27 countries.

Commenting on the discussions, which have taken place over the last five months, the two Asian companies said in a statement: "While progress was made, major differences among the parties remained. In particular, both Hutchison Whampoa and ST Telemedia's views on the terms of the transaction for Global Crossing differed from those of the banks and creditors."

Despite the failure to reach an agreement, the two companies did not rule out making a bid for parts of the company during the auction process. "Hutchison Whampoa and ST Telemedia will keep all of their options open and make a determination about their involvement as events warrant," they said.

Global Crossing also expressed a wish to continue talking with the companies and John Legere, its chief executive officer, said in a statement the company "looks forward to working with Hutchison Whampoa and Singapore Technologies Telemedia as the auction approaches."

Other telecommunication companies are likely to be interested in participating in the auction. A clue to which companies might make bids was uncovered in April when Global Crossing's law firm sent a mass e-mail to the confidential list of bidders with all the recipients visible in the address line, the New York Times reported at the time. Among the companies listed were Verizon Communications Inc., Deutsche Telekom AG, Credit Suisse First Boston Corp., Bank One Corp., the Quadrangle Group LLC, and Bertelsmann AG.

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