XO could acquire Global Crossing

EDP Weekly's IT Monitor, June 9, 2003

Just less than six months after emerging from bankruptcy protection, XO Communications Inc. has offered to acquire bankrupt fiber-optic carrier Global Crossing Ltd. for $250 million in cash in addition to other consideration.

Financier Carl Icahn, who owns at least 80 percent of XO Communications and serves as its chairman, valued the offer at more than $700 million and said Friday it was a better deal for Global Crossing creditors than a previous bid by Singapore Technologies Telemedia Ltd.

Under that deal, the Singapore-owned company agreed to pay $250 million for a 61.5 percent stake in Global Crossing.

In addition to $250 million in cash, XO's offer includes $200 million in bonds secured by Global Crossing's assets, $200 million in junior preferred stock in XO unit New Global Crossing, and 15 million five-year warrants to acquire XO stock at $10 a share.

Icahn said the XO offer would increase the proceeds available to Global Crossing creditors by more than $100 million compared with the Singapore Technologies offer.

Icahn said that the XO offer can close "without regulatory headaches or financing contingencies," and will provide "tremendous synergies."

Representatives of Global Crossing and Singapore Technologies did not have any immediate comment on the bid.

Singapore Technologies had partnered with Hong Kong conglomerate Hutchison Whampoa Ltd. on the bid, but Hutchinson pulled out in early May after a federal task force, the Committee on Foreign Investment in the United States, said it would launch a formal investigation over concerns about Hutchison's ties to China.

U.S. long-distance carrier IDT Corp. has also said it was willing to buy Global Crossing for $255 million to keep the company in U.S. hands.

Earlier Friday, Global Crossing said its April loss narrowed to $75 million from $89 million last month, while its operating loss--defined as earnings before interest and taxes--widened to $98 million from $85 million.

The Florham Park, N.J., company said revenue from continuing operations slipped to $228 million in April from $231 million in March.

Reston-based XO, founded by telecommunications entrepreneur Craig McCaw in 1994, employs about 6,300 people. It provides business customers with a variety of telecommunications services in 63 U.S. markets.