Global Crossing announces 2002 milestones, 2003 outlook

Fiber Optics Weekly Update, March 14, 2003

The debenture holders and Series A preferred stockholders will receive common shares and new convertible debentures, which, in the aggregate, will represent approximately 87.5% of the Company's common stock on a diluted basis. This percentage takes into account the total of the existing shares outstanding, the shares to be issued to the debenture and Series A holders at the closing, the shares issuable upon conversion of the new debentures, and shares issuable upon conversion of warrants to be issued to existing shareholders. This percentage does not take into account new employee stock options, shares issuable upon conversion of $600,000 in convertible debentures to be issued to certain holders of the Series A preferred stock to pay certain legal fees, and certain other issuances.

The exact number of common shares that will be issued to the debenture and Series A holders upon consummation of the restructuring will depend on the conversion price of the new debentures, which will not be known until shortly before closing. The new debentures that will be issued in the exchange (not including the new debentures to be issued in satisfaction of legal fees) will be convertible into not less than 8.75%, nor more than 26.25%, of the Company's common shares, calculated on the same diluted basis. The Company will file a registration statement with the SEC to register the resale of the common shares issued or issuable to the debenture and Series A holders.

Existing shareholders will retain 7.5% of the common stock of the Company on the same diluted basis and will receive non-transferable warrants to purchase approximately 5% of the Company's common stock, exercisable beginning one year after the closing at a 10% premium over an average closing price of the Company's stock prior to the closing of the restructuring. Exercise of the warrants will also be subject to the effectiveness of a registration statement with respect to the common shares to be issued upon exercise of the warrants.

As part of the definitive agreement, the Company will reincorporate in Delaware and, post-closing, will simplify its corporate structure by merging its operating and non-operating subsidiaries into the new Delaware corporation. The subsidiaries include Sorrento Networks Inc. and Meret Optical Communications. Sorrento and Meret products will continue to be marketed under their respective brand names. The new debentures will limit the Company's ability to incur new debt including entering into a new credit facility befor the subsidiary mergers are completed. Accordingly the Company will seek to satisfy its near-tern liquidity needs through equity financing.