Global Crossing files for bankruptcy; NYSE stops trading of shares

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Posted 3:12PM on Monday, January 28, 2002

NEW YORK - International fiber-optics network builder Global Crossing Ltd. filed for Chapter 11 bankruptcy protection on Monday, prompting the New York Stock Exchange to halt trading in the dot-com era high-flyer. At its Friday closing price of 51 cents each, shares in the Bermuda-based company had dropped below the NYSE listing standard, with the average closing price below $1 for 30 consecutive trading days. The NYSE said that it would apply to the U.S. Securities and Exchange Commission to delist the company's stock, which dropped to 30 cents per share before trading was suspended Monday. In the spring of 2000, Global Crossing's stock traded at $61. "This is a complete disaster," said Pat Comack, a telecommunications analyst with Guzman & Co. a Miami investment bank. "I thought they had a chance." Also Monday, Global Crossing announced a $750 investment by Hong Kong-based holding company Hutchison Whampoa and telecom provider Singapore Technologies Telemedia, intended on pumping life into the faltering company as it seeks court protection from creditors who are owed some $12.4 billion. Global Crossing valued its assets at $22.4 billion. The investment, which hinges on court approval of the bankruptcy reorganization by September, would give the two Asian partners a majority stake in Global Crossing. The terms of the bankruptcy would leave current shareholders holding worthless stock. Company officials said they would continue to sell voice and data services over its network during the restructuring period. Employees will receive pay and benefits without interruption. "With this restructuring, we'll put financial uncertainty behind us," said CEO John Legere. In recent months, Global Crossing -- which owns a massive undersea fiber-optic network connecting 200 cities in 27 countries -- has slashed more than a quarter of its work force, as it reported third-quarter 2001 losses of $3.84 per share. Most employees cut last year were involved in laying the company's fiber-optic network, which has since been completed, an official said. Global Crossing has no plans for further job cuts. The company's debt stems mainly from the construction of its network, but also from acquisition of five other telecommunications-related firms in 1999 and 2000, it said. Copyright 2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.