Global Tries to Stop N.Y. Station Eviction

A creditor’s effort to evict Global Crossing Ltd. from a New York site where a fiber-optic cable from England hooks into the network of U.S. land lines would wipe out a third of Global’s transatlantic telephone traffic and slash the company’s value to potential buyers, the company argues in a court document.

The attempt by Level 3 Communications Ltd., which is both competitor and ally, also would cut off Global’s $180-million investment in the Atlantic Ocean cable line and seize a Long Island, N.Y., station that Global has spent $20million upgrading, Global said in a filing in U.S. Bankruptcy Court in Manhattan, which is sorting out the nation’s fourth-largest business failure.

“Once you start pulling the plug on various network elements, it very quickly reduces Global’s value and the likelihood that anything will be salvaged,” said Richard Elliott, co-founder of bandwidth broker Band-X Ltd. in London.

Level 3’s motion to throw Global out of the station may well be denied by a court bent on conserving assets. But it shows the precariousness of Global’s vaunted worldwide network and the dependence all telecommunications companies have on each other, especially at a time when financial troubles seem to be having a domino effect.

“What some people are realizing through this whole telecom meltdown is that the livelihood of these companies is dependent on the livelihood of all the other companies,” said Ron Banaszek, director of TFS Telecom, a unit of energy trader TFS Energy in New York.

And that can become a problem as cash-strapped companies like Level 3 are looking for rent, fees and other payments from firms such as Global Crossing that have filed for Chapter 11 bankruptcy protection.

Smaller problems can reverberate throughout the industry, creating havoc at other companies, experts say.

Level 3 executives and lawyers would not discuss the dispute, which goes beyond the eviction effort. Cynthia Artin, a Global Crossing spokeswoman, said the two companies are in talks to try to settle their differences before an April 11 hearing. The amount at issue is small, perhaps about $5 million, she said, and Global is confident the two can resolve their differences.

“We have been having very constructive talks,” Artin said.

In court papers, the companies outline a business arrangement to jointly build a fiber-optic cable from Bude, England, to Bellport, N.Y., with each owning half the capacity on the line. Global already owns two transatlantic lines.

As part of the construction agreement, Global was to lease space in Level 3 facilities at each end-point, where the so-called Yellow Cable System is connected to land lines to complete calls.

Level 3 contends that Global Crossing never signed the leases even though it started occupying the facilities in November 2000. Without alleging any amount owed, Level 3 sent a notice of default to Global the Friday before Global’s bankruptcy filing Jan. 28.