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Monday, 28 January, 2002, 23:53 GMT
Global Crossing files for bankruptcy
Global Crossing: Cash injection from Hong Kong and Singapore
Global Crossing, the US high-speed communications provider, has filed for bankruptcy protection.

The filing represents one of the biggest ever failures of a telecoms company, following several months of intense speculation about the company's financial position, during which the company's shares have plunged.

Global Crossing
Assets: $22.4bn
Liabilities: $12.4bn
Share price: down 96% in past year
Under the so-called Chapter 11 procedure, Global Crossing will be granted protection from its creditors while it uses new funds to restructure.

The company said it would receive a $750m (532m) cash injection from Hong Kong-based conglomerate Hutchison Whampoa and Singapore Technologies Telemedia.

"We have a new business plan which begins to address many of the concerns that we have had with our cost structures," Dan Wagner, president of Global Crossing Europe, told the BBC's World Business Report, adding that this will enable them "to eventually become a profitable business".

Even as Global Crossing tries to portray the filing as a reprieve or a new start for the company, it is hard to escape the fact that "billions of dollars of investors' funds have disappeared down an electronic plughole," the BBC's Mark Gregory said.


Part of Global Crossing's troubles came from debts built up developing its global network of fibre optic cables, which links more than 200 cities in 27 countries.

Telecom failures
Global Crossing: $25.5bn
360 Networks: $5.6bn
Winstar Communications: $5bn
PSINet: $4.5bn
Exodus Communications: $3.9bn
Figures cited are pre-bankruptcy assets

The company had been attempting to renegotiate the debts.

On Monday, Global Crossing said it had $22.4bn in assets and $12.4bn in liabilities.

Formed in 1999 from a merger between a Bermuda-based fibre-optic cable specialist and a local US telecoms operator, Global Crossing was regarded as one of the most promising of the new generation of telecoms companies that sprang up in the late 1990s. The combined company had secured a stock market value of $75bn.

But the economic slowdown - which hit global telecoms spending - and an increase in competition, together with heavy debts, hit the company hard.

In December, amid much speculation about a bankruptcy filing, it was reported that Hong Kong billionaire Li Ka-shing might invest as much as $1bn in the company.

Deutsche Telekom was also reported to be among parties considering providing funding.

Down 96%

Global Crossing reported losses of $3.4bn for the three months to September, and announced plans to axe a total of 3,200 jobs.

Its next quarterly results statement is due on 26 February.

Trading in the company's shares was halted for the bankruptcy announcement.

The shares have fallen about 96% over the past year, finishing last week at 51 cents.

Ameet Shah, telecoms partner with Accenture
"There was a huge expectation that demand would rocket"
Dan Wagner, Global Crossing
"We have a new business plan"
Telecoms expert Michael Noll
"A telecoms service is more than just optical fibre"
See also:

14 Dec 01 | Business
Global Crossing bankruptcy fears
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