Global Crossing emerges from Chapter 11

Fiber Optics Weekly Update, Dec 12, 2003

Singapore Technologies Telemedia (ST Telemedia) and Global Crossing announced that they have consummated their purchase agreement, allowing a newly restructured Global Crossing to emerge from Chapter 11 proceedings. ST Telemedia invested $250 million in Global Crossing for a 61.5 percent equity share of the company. Global Crossing's reorganization plan, which was confirmed by the United States Bankruptcy Court for the Southern District of New York on December 26, 2002, became effective on December 9, 2003.

In addition to its $250 million equity investment, ST Telemedia has agreed to purchase $200 million in senior secured notes that originally were to be distributed to former creditors. Under the final, amended plan of reorganization, the $200 million cash injection by ST Telemedia was used by Global Crossing to pay its creditors. According to Mr. Lee, this additional investment emphasizes ST Telemedia's "strong commitment to Global Crossing's employees, customers and future success."

While in Chapter 11, Global Crossing undertook significant streamlining activities and is now well positioned to become a market leader in global data and IP services. Global Crossing retained a revenue base of nearly $3 billion, while reducing telecommunications segment operating expenses from continuing operations by approximately 63 percent from a peak annualized spend of approximately $2 billion at the beginning of 2001 to an estimated current annualized level of just over $700 million currently.

In addition, Global Crossing's long-term debt and convertible preferred stock was reduced from roughly $11 billion at the end of 2001, including approximately $1 billion of Asia Global Crossing debt, to $200 million of debt post-emergence. Completion of its network has enabled Global Crossing to reduce capital expenditures approximately 95 percent from slightly more than $4.1 billion in 2000, including approximately $800 million of Asia Global Crossing's capital expenditures, to less than $200 million estimated for 2003.

Global Crossing signed approximately 4,200 new and renewal customer contracts, valued over the life of the contracts at $1.7 billion, during its restructuring. Furthermore, it is on track to transmit 17 billion minutes of Voice over Internet Protocol (VoIP) traffic in 2003, for a 15-fold increase in VoIP volume since 2001, and overall IP traffic is expected to grow by more than 700 percent over the same period.

As previously announced, Global Crossing's plan of reorganization included the cancellation of existing preferred and common stock. The holders of these previously publicly traded securities received no consideration under the company's plan of reorganization.

Under the plan of reorganization, Global Crossing issued 61.5 percent of the equity or 18 million shares of new preferred stock and 6.6 million shares of new common stock to ST Telemedia in consideration for its $250 million equity investment in the new Global Crossing. The remaining 38.5 percent of the equity or 15.4 million shares of the new common stock has been distributed to Global Crossing's former secured and unsecured creditors. The common stock will initially trade in the Over-the-Counter Market, and Global Crossing has applied for quotation of its new common stock on the NASDAQ National Market.