Asian Firms Back as Global Bidder
Two Asian companies that withdrew an early offer to buy Global Crossing Ltd. after creditors deemed it inadequate are now the top contender to buy the assets of the telecommunications company--and for a lot less than the $750 million in cash initially offered.
Hutchison Whampoa Ltd. in Hong Kong and Singapore Technologies Telemedia are offering only a small amount of cash and more than 21% of the stock to creditors, who are owed $12.4 billion in the nation’s fifth-largest Chapter 11 case, sources familiar with the bidding process said.
Caught in the industry’s downward spiral, Global Crossing creditors and executives are finding that the longer they have delayed making a deal, the lower the bids get. On Monday, the company for the fifth time delayed a decision, from today to Thursday morning. A court hearing on the bid was delayed from Wednesday to Thursday afternoon.
A flagging industry, in even worse shape after the bankruptcy filing last month of giant WorldCom Inc., has put too many assets on the market. Troubled firms, originally hurt by too much capacity and too little demand, now are faced with selling their portions of that glut at fire-sale prices.
“They probably could get $1 billion if they just liquidated their assets, and that might be the best deal they get,” one source said.
Global Crossing listed assets of $22.4 billion when it filed for protection from creditors Jan. 28.
It also filed for bankruptcy protection with a joint Hutchison-SingTel offer to buy 79% of the firm by giving creditors $300 million of the cash plus $800 million in notes and 21% of the stock. They would have put the remaining $450 million into Global. Creditors later said the offer was too low, and the companies withdrew it.
“They should have done the deal then. It would have made Hutch and STT look very stupid,” another source said. “But now they just look very stupid themselves and make the two [companies] look good.”
Spokeswomen for the two Asian companies would not discuss the status of talks for Global Crossing. “We have not made a decision on the investment yet,” SingTel’s Melinda Tan said. Hutchison’s Laura Cheung said her company is keeping its options open but has not submitted a formal bid.
A Global Crossing spokeswoman would not comment.
