Firm Trims Stake in Global Crossing
Pacific Capital Group Inc., an investment firm headed by Global Crossing Ltd. Chairman Gary Winnick, sold 10 million shares of Global Crossing to make investments in other companies.
Closely held Pacific Capital, founded by Winnick in 1985, sold the shares with a so-called collar arrangement.
The collar will let the Beverly Hills-based investment company share in any future gains in the stock price while limiting exposure to a price decline.
Shares of Global Crossing, which owns one of the world’s largest fiber-optic communications networks, have plunged from their peak of $64.25 in May 1999.
Much of the decline came last year, when the company had a $1.7-billion loss on sales of $3.8 billion. In the first quarter, the company had a wider-than-expected loss of $615.9 million on higher expenses.
“Global Crossing shareholders shouldn’t look at this [the stock sale] as a statement about Global Crossing,” said Thomas Weisel Partners analyst James Linnehan. “This is a way for Pacific Capital to diversify their holdings.”
Shares of Global Crossing, based in Hamilton, Bermuda, with executive offices in Beverly Hills, fell $1.06, or 7.5%, to close at $13.16 on the New York Stock Exchange. They have fallen 80% from their record high, though they are above their spring low of $8.88.
Pacific Capital will use the money from the sale to make investments in other businesses. It wasn’t more specific.
The company’s investments include telecommunications, technology and media companies.
Terms of the transaction, including the prices Pacific Capital received for the shares, were not disclosed. The company said it sold the shares last week to an unnamed financial institution.
Pacific Capital expects to file a disclosure statement with the Securities and Exchange Commission this week, said Jonas Leddington, a Pacific Capital spokesman with Citigate Sard Verbinnen.
Not including the 10 million shares in the collar transaction, Winnick owns 80 million, or 8.9% of Global Crossing’s outstanding shares.
