Alternative Global Plan Proposed

A group of Global Crossing Ltd. shareholders opposed to the company’s bankruptcy reorganization plan filed its own proposal Friday, offering to put as much as $5.5 billion into the fiber-optic network operator over three years and repay all creditors and debt holders.

The shareholder proposal, an unusual offer for the sale of warrants to buy stock at a later date, was quickly panned by industry analysts. But it spurred hope that new bidders will soon emerge to offer more than the $750 million that the company was able to get in a pending deal with two Asian companies. Under Global Crossing’s plan, shareholders would get nothing.

Meantime, the company said Friday that it has offered a voluntary severance program to the company’s 5,000 employees in North America as part of its cost-cutting efforts.

Company spokesman John Schmidt said there is “no set number” for the payroll reduction, but several employees have said as much as 40% of the staff may leave through voluntary departures and firings.Seizing on shareholder unrest with Global’s management, K.A.B. Group, a boutique international investment banking house based in New York, cobbled together a plan to refinance the company with help from David E. Mersereau, an investment advisor in the Connecticut firm of Coburn & Meredith.

Mersereau said the plan allows the company, with $22.4 billion in assets tied mainly into the world’s biggest network of fiber-optic cable, to remain viable as industry demand catches up to supply.

The aim is to upset the pending plan that Global had arranged with two Asian companies, Hutchison Whampoa and Singapore Technologies Telemedia.

The Asian companies would invest $750 million for a 79% stake in Global Crossing. Preferred and common shareholders would get nothing, and bondholders would get the remaining 21% of the firm.

“How can you wipe out $6 billion in equity and not give us anything, and how can you wipe out $2.4 billion in preferred shares and not give us anything,” said Kennon A. Brennen, managing partner of K.A.B. Group. “People are incensed with getting wiped out. This alternative calls them to arms to reinvest in this asset, and now we’ll see what they do.”

The K.A.B. proposal, filed with the U.S. Bankruptcy Court in Manhattan, would raise $2 million by issuing 1.5 billion warrants, and would raise an additional $3.5 billion in 18 months to three years later as the warrants are converted to stock.

The plan would pay back interest and dividends due on more than $10 billion in debt securities, preferred stock and loans and make regular payments under existing terms of those transactions. Existing shareholders would retain at least 37.7% of the company, and investors who convert warrants into shares would get the rest.

“I think it’s a pipe dream,” said industry analyst Patrick Comack at Guzman & Co. in Miami. “I don’t think this company can be revived as a separate public company.” The pending deal with the Asian group is so bad, he said, that there is little hope that anyone would improve on it much.

Separately, Computer Sciences Corp. said Friday that it will end a $400-million outsourcing deal with Global Crossing that the two companies signed less than three months ago.

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Times staff writer Elizabeth Douglass contributed to this report.