Global Crossing Sees ‘Significant Loss’

Global Crossing Ltd. disclosed Tuesday it has burned through $50 million a week since it filed the fourth-largest bankruptcy in U.S. history last month, making its restructuring more urgent.

The troubled telecommunications firm said it has about $700 million of available cash in its bank accounts, down from $900 million when it filed for Chapter 11 bankruptcy protection on Jan. 28. The company, which had $2.2 billion in cash at the end of September, assured investors and employees late last year that it had enough cash on hand to operate through the end of 2002.

For creditors, the company’s cash holdings are important because they will help determine how much money is available to fund a reorganization. Creditors are owed at least $12.4 billion.

Global Crossing said it expects to report “a significant net loss” for the fourth quarter and full year, which will include at least an additional $10 billion in noncash write-offs.

The company planned to report fourth-quarter and full-year financial results for 2001 Tuesday. Instead, it released “unaudited estimates of revenue” because its auditor, Andersen, is still reviewing financial statements.

Global Crossing said it would release its complete financial results when it files its annual report with the Securities and Exchange Commission. A company spokesman said it’s not clear when that will happen.

The company’s Asia Global Crossing subsidiary, which is not part of the bankruptcy filing, also reported preliminary revenue for its fourth quarter and full year, and warned that it expects to record a “material” loss for the fourth quarter and for the year and that Andersen probably will question the company’s ability to survive.

Revenue from continuing operations at the parent company was approximately $804 million during the last three months of 2001. Comparable figures for the same quarter a year earlier were not available, the company said.

Global Crossing’s fourth-quarter estimates include revenue of $764 million from corporate customers using its vast undersea fiber-optic network. That figure excludes the effect of the company’s controversial swapping of capacity on that network with other carriers. Exchanges of the so-called indefeasible rights of use, or IRUs, between Global Crossing and rival carriers have come under fire from regulators and investors because they can inflate revenue.

For the full year, revenue from continuing operations was approximately $3.2 billion, including $100 million from IRUs, the company said.

But that will be more than offset by billions of dollars in new write-downs. In addition to about $3 billion in charges previously reported, Global Crossing said Tuesday it expects to write off about $8 billion in goodwill and other intangible assets, along with billions more for the declining value of tangible assets, such as its network.

Asia Global Crossing said fourth-quarter revenue, excluding IRUs, rose more than threefold, to $46.7 million. Annual revenue excluding IRUs soared 328% to $121.5 million. Global Crossing owns 59% of Asia Global Crossing. Both firms are based in Bermuda, with executive offices in Beverly Hills.

Asia Global Crossing shares gained 3 cents, to 36 cents, in Tuesday trading on the New York Stock Exchange. The financial results were announced after the markets closed.

Investigators at the SEC and the FBI are now sifting through documents for proof of any wrongdoing by Global Crossing. The SEC has subpoenaed documents from Global Crossing, Qwest Communications International Inc., Velocita Corp., and 360Networks, which also is operating under bankruptcy protection. Velocita’s executive chairman is Robert Annunziata, one of Global Crossing’s four former chief executives.

Global Crossing Chief Executive John Legere praised his embattled employees for keeping the company going amid an industry-wide meltdown and a barrage of negative publicity about company executives’ pay, stock sales and potential conflicts of interest.

Also on Tuesday, Global Crossing named Carl Grivner chief operating officer, reviving a position that was eliminated in October. Grivner previously served as the company’s executive vice president of global operations.

As operating chief, he will continue to oversee global operations, as well as product management and some sales and marketing functions.

In addition, the company said director Mark Attanasio has resigned from the board and that it plans to recruit more outside directors.

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Times staff writer James S. Granelli contributed to this report.