Global Crossing Audits Pulled
Shares of Global Crossing Ltd., the fiber-optic network operator that exited bankruptcy protection in December, fell 29% on Friday after Grant Thornton withdrew its audits for the last three years.
Global Crossing shares tumbled $2.85 to $7.15 on Nasdaq. The stock has fallen 77% this year.
Without audited financial results, the shares are likely to be delisted from Nasdaq, said Igor Volshteyn, an analyst at Tejas Securities. Global Crossing surprised investors Tuesday by saying it would restate 2003 results after underestimating some liabilities.
“Their former auditors have refused to stand by their audits. They have no financials, and that’s putting a lot of pressure on the stock,” said Volshteyn, who owns Global Crossing shares.
Grant Thornton had to withdraw its audits because Global Crossing said its financial information could no longer be relied on, General Counsel Margaret Zagel said.
“If the company can’t stand behind its financial statements, we cannot leave an opinion out there,” she said.
Global Crossing shares were previously delisted from the New York Stock Exchange in January 2002 after the company filed for bankruptcy protection.
Hamilton, Bermuda-based Global Crossing disclosed Grant Thornton’s move in a filing with the U.S. Securities and Exchange Commission.
The restatement, which is tied to money Global Crossing may owe other carriers to use their networks, is the latest misstep for the company, which is under investigation by U.S. regulators for a separate accounting matter. Global Crossing said it underestimated an “accrued cost-of-access liability” by $50 million to $80 million at the end of 2003.
Reported results for 2002 and 2003, and the company’s 2004 forecasts, including cash needs, should be disregarded pending the outcome of a continuing accounting review for last year and 2002, Global Crossing said. The company postponed its annual shareholders meeting, set for June, and the release of first-quarter results.
Global Crossing spokeswoman Becky Yeamans said she had no comment beyond what the company said in its filing.
