More Than 40 Firms Are Eyeing Global

More than 40 companies are reviewing Global Crossing Ltd.’s operations and weighing whether to bid for the company in Bankruptcy Court, Chief Executive John Legere said in a weekend interview.

The flurry of investor interest in the Bermuda-based operator of a worldwide fiber-optic network should help the company convince anxious creditors that a reorganized Global Crossing would yield a bigger payback than liquidation.

“There’s work to be done, but I think we’re communicating in a productive way,” Legere said of his recent meetings with bankruptcy committees. “Looking at the liquidation value of the company is a mandatory component of the assessment that a creditor has to make ... but I think they all believe that the company is worth much more as an ongoing entity.”

As part of its Jan. 28 bankruptcy filing, Global Crossing proposed a deal in which two Asian firms--Hutchison Whampoa and Singapore Technologies Telemedia--would invest $750 million for a 79% stake in a reorganized Global Crossing.

Creditors and bankers view the deal as insufficient and problematic, because it would provide less than 5 cents on the dollar and could raise national security concerns because of Hutchison’s close ties to the Chinese government.

Over the last two weeks, however, three other companies have been identified as potential bidders: Gores Technology Group and Platinum Equity, both of Los Angeles, and Texas Pacific Group, based in San Francisco. Gores and Platinum are run, respectively, by brothers Alex and Tom Gores, both of whom specialize in resurrecting troubled technology firms. Texas Pacific, headed by David Bonderman, has turned around several airlines.

But about 40 other companies have signed confidentiality agreements to look over Global Crossing’s books, Legere said Saturday.

That could lead to a bidding war, which would be good news for Global Crossing’s creditors, who are owed about $12 billion.

A new round of cost cutting announced Friday also could make the company more attractive. Global Crossing said it would eliminate 1,600 more jobs, on top of 754 that were pared in a voluntary buyout Friday. In addition, the company said it would shutter 71 offices and cut capital spending to conserve cash.

As part of its new austerity measures, Global Crossing moved to cancel leases on two private airplanes--a luxury that was a sore point with the thousands of employees facing layoffs.

In a Bankruptcy Court filing, Global Crossing said the planes cost the company $260,640 a month, or $3.1 million a year, in rent. The company pays an additional $5.5 million a year for operating costs, including maintenance, fuel and a staff of six pilots and five other employees.

All told, the moves will reduce the company’s operating expenses by 40%, to $900 million this year.

Legere said that a leaner Global Crossing will cater to existing customers and their expanding needs, instead of pushing for hard-to-get new corporate customers.

For that plan to work, however, customers will have to stick with Global Crossing through the staff cuts and the uncertainty of bankruptcy.

Last week, a dispute with XO Communications Inc. left more than 100 of Global Crossing’s U.S. customers without long-distance access for days. Legere said the interruption was brief and affected a minute section of the company’s network.

XO and Global Crossing reached a truce, and after a few days, the companies restored services to their respective customers, according to Global Crossing.