Asia Global Crossing Delays Interest Payment

Asia Global Crossing on Monday delayed for up to 30 days an interest payment on $408 million of senior notes so it can continue negotiations with bondholders about restructuring its high-yield debt.

The Bermuda-based high-speed communications network operator said it has about $351 million in cash, sufficient to fund its daily operations and pay the interest due on the 13.375% senior notes due 2010 by the end of the 30-day grace period if no agreement is reached.

However, the company has been looking to reduce expenses and raise additional funds since its parent, Global Crossing Ltd., refused a $400-million loan request under a credit facility last December.

Delaying the interest payment also allows Asia Global Crossing to continue negotiating with potential equity investors, the company said.

Separately, Global Crossing, which filed for Chapter 11 bankruptcy protection in January, said it’s protesting a decision by the Defense Department to rescind a contract worth as much as $450 million. The three-year research and engineering agreement, awarded in July, hadn’t been initiated.

After unsuccessful bidders contested the results, the contract was put out for a second round of bids. WorldCom Inc. said in an April 4 statement it won the contract.

The Defense Information Systems Agency said Global Crossing was ineligible because of its “financial situation,” Global Crossing spokeswoman Catherine Berthier said.

“It is our contention that we met all of the stated criteria for demonstrating financial responsibility, and we therefore should have been considered for the contract,” Global Crossing Chief Executive John Legere said in a statement.