Global Crossing to issue $250 million 4.7% mandatory to ST Telemedia in restructuring

By Ronda Fears

Nashville, Oct. 11 - Global Crossing Ltd. announced a series of debt restructurings, including the issuance of a $250 million 4.7% payment-in-kind secured mandatory to majority shareholder Singapore Technologies Telemedia (ST Telemedia) aimed to provide additional short-term liquidity to the company.

ST Telemedia, which owns 61.5% of Global Crossing, could get an additional 16.2 million shares through the convertible.

But Global Crossing also said that, beyond the refinancings announced, it expects to need an additional $40 million of financing to fund its anticipated liquidity requirements through the end of 2004. Moreover, based on the company's current projections, it will need to raise substantial additional financing to meet its anticipated liquidity needs beyond 2004.

Global Crossing also announced Friday that it would cut 600 jobs. The company, which emerged from bankruptcy in December, said it believes these steps will facilitate the execution of debt financings in the fourth quarter of 2004 intended to meet long-term funding requirements, but Global Crossing stock dropped sharply Monday, down 22.5% at noon ET, amid concerns it could face a second bankruptcy.

Global Crossing said in the announcement Friday that by filing a restated 2003 annual report and quarterly reports for first and second quarters it has regained compliance with the Securities and Exchange Commission as well as Nasdaq listing requirements.

"With the initiatives announced today, we've regained compliance with SEC reporting and Nasdaq listing requirements, taken an important first step in securing long-term capital, and laid out a business framework for achieving our goal of becoming a leader in global telecommunications," said John Legere, chief executive.

"We are focusing our efforts on areas of our business that offer long-term growth and viability, and those in which Global Crossing will maintain a lasting differentiated position. As we move forward, we will invest selectively in these strategic products and services, while devoting fewer resources to, or exiting, unprofitable parts of our business."

The company has entered into an agreement with STT Communications, STT Crossing and STT Hungary that provides for a refinancing of the bridge loan facility and the 11% senior secured notes, which aided Global Crossing's emergence from bankruptcy, held by the affiliates of ST Telemedia.

The agreement permits the company to incur debt under a working capital facility and releases the security assets linked to the senior notes.

As of June 30, Global Crossing said it has unrestricted cash and cash equivalents of $139 million.

Global Crossing said it is seeking to arrange financing to provide it with the additional liquidity needed through the end of 2004 and beyond.

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