Buyers Could Benefit From Global Crossing ReorgBuyers Could Benefit From Global Crossing Reorg

Bankrupt telco Global Crossing is aiming to erase $6 billion in debt and emerge from Chapter 11 early next year under a bankruptcy plan filed Monday. The outline does not affect separate investigations of Global Crossing's accounting by the Securities and Exchange Commission and the Justice Department and dozens of lawsuits filed against it by shareholders who allege they were misled.

The plan calls for Hutchison Whampoa Ltd. of Hong Kong and Singapore Technologies Telemedia Pte Ltd. of Singapore to pay Global Crossing's debt holders $250 million in cash in exchange for 61.5% ownership of Global Crossing. The carrier's creditors also would get $250 million in cash, plus $200 million in notes and a 38.5% stake in the carrier. Under the plan, the carrier's former shareholders would receive nothing.

The deal's combined $407 million value would give Global Crossing's new owners a state-of-the-art telecom network spanning the globe for a fraction of its original cost. Global Crossing listed assets worth $22.4 billion when it declared bankruptcy early this year.

The elimination of Global Crossing's debt and the bargain price paid by its new owners could mean great deals for customers willing to take a chance on the carrier, analysts say. Customers should approach doing business with Global Crossing cautiously, since the restructuring deal could fall through, but businesses interested in capitalizing on Global Crossing's status may be able to negotiate favorable rates and conditions for top-quality services, says Max Smetannikov, a senior analyst with Current Analysis.

Freshly liberated from most of its debt, "the company is really in a great position to compete because it has a very unique network," Smetannikov says, with services such as global IP virtual private networks that other carriers will have trouble duplicating because of the expense involved in building a comparable network.