Global Crossing today announced that it has signed a definitive agreement under which Hutchison Telecommunications Ltd and Singapore Technologies Telemedia will invest a total of $250 million for a 61.5 percent majority interest in a newly constituted Global Crossing on its emergence from bankruptcy.
The agreement was approved today in a hearing before the Bankruptcy Court for the Southern District of New York. Global Crossing’s creditor groups support the agreement.
Global Crossing is also preparing a Chapter 11 plan of reorganisation. Global Crossing expects to file its plan in September and to emerge from bankruptcy in early 2003, subject to satisfying various contractual closing conditions, including regulatory approvals and confirmation of its plan of reorganisation by the bankruptcy court.
The terms of the Hutchison and ST Telemedia agreement provide that Global Crossing’s banks and creditors will receive 38.5 percent of the common equity in the newly constituted Global Crossing, $300 million in cash and $200 million of new debt in the form of senior notes. Existing common equity and preferred shareholders of Global Crossing will not participate in the new capital structure.
Under the agreement, Global Crossing will retain its UK national business, its conferencing division, and Global Marine – three businesses which it had previously considered selling in order to maximise its cash position. Customers of these businesses, as well as Global Crossing’s other customers, can expect service to continue without disruption.
The agreement with Hutchison and ST Telemedia follows several months of discussions with a large number of bidders. After reviewing and negotiating all the bids submitted, Global Crossing and its creditors entered into separate negotiations with Hutchison and ST Telemedia.
These negotiations resulted in the agreement announced today. As a result of the agreement, Global Crossing has cancelled the auction scheduled for August 14, 2002.