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Companies
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2002-01-29 06:12:00-05
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Hutchison and ST to take Majority Stakes in Global Crossing
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Asian telecom firms to rescue fiber-optic network firm in wake of bankruptcy filing on Monday
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Hutchison Whampoa and Singapore Technologies Telemedia plan to take a majority stake in Bermuda-based Global Crossing, which filed for bankruptcy on Monday. The deal is conditional on a court-approved restructuring plan to be submitted by August, Global crossing said in a Monday statement. The plan calls for creditors to get a combination of cash, new debt and new equity in the restructured company. Existing shareholders, including founder Gary Winnick, will not own any of the company under the new capital structure. Hutchison and ST already have links to Global through its Asia Global Crossing subsidiary, which is not one of the units filing for bankruptcy. Analysts believe that Hutchison and ST are getting a good deal. If the debt write-off is approved, the investment values Global Crossing at about one-sixth of its current value. According to Global crossing CEO John Legere, there could be other bidders for a stake in the company as Hutchison and ST have signed a letter of intent, meaning their investment is not yet finalized. The developments with Global crossing signal the difficulties in the telecoms sector with many firms hit by slower-than-forecast growth. The main asset of Global is its fiber-optic network connecting major cities but not its underseas fiber-optic cable, which has not seen as great demand as earlier projected. The company notes that customers will not notice any change in service and that employees will see their pay and benefits continue without interruption.
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