2 May Miss Deadline for Global Crossing Bid

The two companies that Global Crossing Ltd., the ailing fiber-optic network operator, is relying on for a combined offer to rescue it from creditors may miss a deadline today to formalize their offer.

Creditors are pushing Hong Kong’s Hutchison Whampoa and Singapore Technologies Telemedia to increase the $750-million cash injection they proposed as part of Global Crossing’s filing for bankruptcy protection in January, a source close to the process said.

Representatives for the Asian companies could not be reached for comment, but Global Crossing confirmed Monday that the deadline might be missed.

“I wouldn’t be surprised if this were delayed slightly, but it wouldn’t have much of an impact,” said Cynthia Artin, a spokeswoman for Global Crossing.

The offer still could be formalized at a later date, she said, but by missing the deadline Hutchison Whampoa and STT would forfeit their right to a breakup fee if they failed to eventually acquire Global Crossing.

Hutchison Whampoa and STT want 79% of the Bermuda-based telecom firm. Creditors, who are owed billions, would receive the remaining 2% and $300 million from Hutchison Whampoa and STT.

More than 60 potential bidders have expressed interest in acquiring a piece or all of Global Crossing’s 100,000-mile network since the telecom filed Jan. 28 the fourth-largest bankruptcy case in U.S. history.

But under bankruptcy law, they are not allowed to formalize a bid until a 120-day exclusivity period expires, during which time Global Crossing can formulate its own restructuring plan without worrying about competing ones from outsiders.

Last week, the company asked a Bankruptcy Court judge to extend the exclusivity period by 125 days. The judge is expected to rule on the motion next month.

Global Crossing made the request because of the complexity of the bankruptcy, not because of problems with Hutchison Whampoa and STT’s proposed bid, Artin said.

Some parties considering a bid after the exclusivity period said any extension would be a bad idea.

“We’re concerned that if the exclusivity period is extended, with [Global Crossing’s] burn rate there will be no liquid assets left. And that would shift negotiating power from the creditors to the debtors,” said Michael Pascazi, chief executive of Fiber Optek Interconnect Corp., a private fiber-optic firm in Wappingers Falls, N.Y.

On Monday, Fiber Optek detailed a plan to offer Global Crossing creditors $250 million in cash, $500 million in expected accounts receivable payments, a 28% stake in the new firm, and an option to increase that amount by 8% through convertible warrants.

Although the plan offers creditors significantly less upfront cash and equity than the Hutchison Whampoa and STT bid, creditors could reap a much bigger return if a restructured Global Crossing is moderately successful, Pascazi said.