Global Crossing seeks Chapter 11 bankruptcy protection

January 28, 2002 (Computerworld)

Even though it has filed for bankruptcy protection in both New York and its home base of Hamilton, Bermuda, Global Crossing Ltd. doesn't expect to lay off any of its 8,000 employees worldwide or see service interruptions for its 85,000 customers, company spokeswoman Becky Yeamans said today.

When the telecommunications company announced this morning that it was seeking Chapter 11 protection in the U.S. Bankruptcy Court in New York as well as bankruptcy protection from the Bermuda Supreme Court in Hamilton, it was promptly delisted by the New York Stock Exchange. The NYSE cited the company's move to Chapter 11 and the fact that its stock had been trading for less than $1 per share for more than 30 days as the reasons for the delisting.

At the time the stock was delisted this morning, it was trading at 51 cents per share. By early afternoon, it had fallen to 30 cents per share.

The company also announced that two Asia-based companies, Hutchinson Whampoa Limited and Singapore Technologies Telemedia Pte. Ltd., have said they will invest $750 million in the company in return for a controlling share of Global Crossing. It now has an estimated debt of $14 billion.

Yeamans said no date has been set to finalize that deal, which is contingent on Global Crossing having "successfully gone through the restructuring" by August.

Neither company carried news of the deal on their Web sites. But Global Crossing quoted officers at both companies as saying they are excited by the opportunity presented by the deal.

Yeamans said Global Crossing blames the downturn in the worldwide economy for pushing the company into its precarious position. But, she said, the company believes it has a "great asset" in its telecommunications network, which is located in 27 countries and serves 85,000 customers.

Global Crossing also said service to those customers will continue uninterrupted.

"[Customers] don't have to worry about service going forward. We don't expect any change in operations. This filing is primarily for U.S. entities," Yeamans said.

According to the company statement, equity shareholders "would not participate in the new capital structure."

Related stories:

• Global Crossing rolls out VPN products, Oct. 16, 2001


• Layoffs, losses, closures hitting telecoms hard, Aug. 2, 2001


• Global Crossing completes big optical networking project, June 22, 2001