IDT Tuesday made a bid in bankruptcy court Tuesday for
the troubled fiber optic company Global Crossing Ltd. for $255 million.
IDT’s bid comes as Global Crossing is seeking final regulatory approval from
U.S. government security agencies for the sale of the company for $250
million to Hong Kong’s Hutchison Whampoa Ltd. and Singapore Technologies
Telemedia Pte.
At issue for the federal government, and certain agencies, such as the FBI,
CIA and Defense Department, is whether the sale of the company by a foreign
company and foreign government would pose any national security threats.
Global Crossing controls both a worldwide and U.S.-based fiber-optic
network, and the Hutchison-Singapore partnership has already received full
bankruptcy-court approval for the deal. That deal would give
Hutchison-Singapore a 61.5 percent stake in Global Crossing. Global Crossing
filed for Chapter 11 bankruptcy protection back in January 2002.
It is unclear whether IDT’s last minute bid will have any impact on Global
Crossing’s planned sale. However, if the U.S. government was to block its
planned deal with its Asian partners, then IDT would likely be interested in
pushing forward with its counterbid.
IDT has been moving to buy the assets of other troubled telecom companies,
including an offer to buy two units of Worldcom, Inc. for close to $5
billion.
Under Global Crossing’s proposed deal, the Asian investors would pour $250
million in cash immediately for a controlling stake in the fiber-optic
company, whose assets are estimated to be worth $22 billion.
Global Crossing is under intense pressure from its creditors, and its Asian
investors would pay creditors an additional $300 million in cash, following
the culmination of the bankruptcy reorganization. After paying down its
debt, it is expected that creditors would issue the reorganized Global
Crossing $200 million in new debt.
ST Telemedia and Hutchison Whampoa have until April 30th to complete the
reorganization of Global Crossing, and no other offers can be considered by
the bankruptcy court before that date. IDT’s Jim Courter, the company’s CEO
and former Congressman, argues that Global Crossing’s assets should only be
sold to a U.S. company, rather than an overseas concern, because its network
carries confidential, even classified data from several top U.S. government
agencies.
The Asian partners have received regulatory approval from the U.S., U.K. and
European Union, but await final approval from the FCC and the Committee on
Foreign Investment in the U.S.
In a press release issued Tuesday by IDT, the company’s chairman Howard
Jonas is quoted saying “would we give the keys to the Justice Department
buildings or the board rooms of some of our largest corporations to a
foreign government so they could listen in? Absolutely not. The idea is
absurd.”
