Bankrupt Global Crossing Being Sold For $250 Million

A bankruptcy judge approved the agreement with Hutchison Whampoa and Singapore Technologies.

The deal is much smaller than an offer Global Crossing's banks and creditors rejected in May, and a sliver of the company's peak value of $50 billion during the heyday of dot-coms. But banks and creditors raised no objections to the latest deal.

An outside financial adviser to Global Crossing who was called to testify at a hastily scheduled hearing Friday said only three credible bids had been received during a lengthy auction process.

Bidders were spooked by the continuing collapse of the business, said the adviser, Arthur Newman, the senior managing director in charge of the restructuring for the Blackstone Group.

'It's a very difficult world today in the telecommunications industry,' Newman said.

The Asian companies bought control by agreeing to invest $250 million in cash in Global Crossing's business. As another part of the deal, Global Crossing will pay $300 million in cash and issue $200 million in notes to its assorted lenders and creditors.

The investors will hold a controlling 61.5 percent stake in the new Global Crossing that emerges from bankruptcy, possibly early next year. Under the earlier deal that was rejected, the investors would have gotten a 79 percent stake.

Six percent of the equity will go to lenders and 32.5 percent will go to unsecured creditors. Owners of Global Crossing stock will receive nothing.

Global Crossing, whose bankruptcy is the country's fourth-largest ever, piled up $12.4 billion in debt building a vast worldwide communications network at the height of the Internet boom.

Most of the company's debt comes from building a 100,000-mile fiber-optic network that connects more than 200 cities in 27 countries. The Bermuda-based company had hoped to dominate the market for high-speed data communications.

While few fiber-optic networks compare in size, the building frenzy of the past few years created a glut of capacity that forced down prices. At the same time, the collapse of the Web economy eliminated a driving force for the explosion of online traffic that Global Crossing and its rivals were counting on.

Still, even in the current environment, Web usage and electronic commerce are growing steadily.

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