Global Crossing Shares Tumble 34%

Investors slammed the already battered stock of Global Crossing Ltd. on Thursday, sending the telecommunications firm’s shares down 34% amid renewed fears that it might run out of money and file for bankruptcy protection.

The stock slid as low as 64 cents during trading on the New York Stock Exchange before rebounding slightly to close at 74 cents, down 38 cents. Global Crossing’s share price has fallen more than 95% this year, and shares have been trading at less than $1 on and off for several months.

Thursday’s hit came in the wake of negative comments from a prominent Wall Street analyst and a dramatic move this week by the credit-rating firm Moody’s Investor Service, which on Monday slashed the debt ratings for Global Crossing and affiliate Asia Global Crossing to default levels.

In downgrading the debt, Moody’s said that the companies are “increasingly pressured by protracted softness in global telecom spending,” and that Global Crossing’s remaining $2.4 billion in cash “may be insufficient to sustain a fully funded business model.”

Moody’s also expressed concern that Asia Global Crossing may seek to draw substantially--if not fully--from its $400-million line of credit with parent Global Crossing. Moody’s said such a move by Asia Global Crossing would “diminish Global Crossing’s stand-alone liquidity position.”

J.P. Morgan seconded that worry, noting in a Wednesday report that “if Asia Global Crossing is drawing down on its credit facility, it could represent an attempt to shield this money from a potential Chapter 11 filing.”

Executives at Global Crossing, including founder Gary Winnick, and Asia Global Crossing declined to comment on the reports or the stock’s latest slump. Company officials also declined to discuss rumors of negotiations aimed at lining up a much-needed cash infusion.

Global Crossing, which has executive offices in Beverly Hills, has a unique and almost fully built worldwide fiber-optic network for carrying voice and data traffic for corporations and other phone companies.

But after raising billions of dollars in funding, Global Crossing has more than $9 billion in debt, mounting losses, declining revenue and a telecom market that is a long way from rebounding.

Global Crossing posted a net loss of $3.35 billion in the quarter ended Sept. 30. It listed assets of about $12 billion, plus about $2.2 billion in cash and equivalents. It had debt of $5.5 billion in bonds, $2.25 billion in senior secured notes and $3.2 billion in liabilities for preferred stock.

The company burned through $2.4 billion in cash for the quarter ended Sept. 30, but that spending rate is expected to slow in subsequent quarters because of cost-cutting moves.

Things are not much brighter at Asia Global Crossing, which is mostly owned by Global Crossing. The two firms recently abandoned plans to merge their operations amid objections from Asia Global Crossing’s other shareholders.

John Legere, the fifth chief executive at Global Crossing in 41/2 years, also is the top executive at Asia Global Crossing--a situation analysts call awkward at best, a conflict of interest at worst.

Meanwhile, Legere is operating in survival mode, ordering layoffs and a sharp cut in capital spending and working hard to win relief from bankers and to regain the trust of Global Crossing’s investors.

He hopes to quickly complete the pending $360-million sale of its IPC unit and then raise as much as $800 million selling its Global Marine fiber-laying business.

But with the company’s bonds trading at between 7 cents and 10 cents, it’s clear that investor confidence is continuing to shrink, said Patrick Comack, a senior equity analyst at Guzman & Co.

“Legere is doing some things that could get them through 2002,” Comack said. “But the economy is not getting any better ... and if you look at the bond price, then things look pretty bleak.”