Post-2001 and 2002 Bankruptcy Filing
Global Crossing gained a great deal of publicity from sponsorship of NASCAR racing and the attempt to rescue a Russian submarine, but its business was struggling. By early 2001, emerging telecommunications carriers and online businesses – two groups Global Crossing had been relying on to build traffic on its network – were fading fast. Walt Disney withdrew from its money-losing site Go.com; eToys announced that it was running out of cash. Many telecom companies filed for bankruptcy that year, including Global Crossing customers Northpoint Communications Group and GST Telecommunications. Nevertheless, Casey projected continued financial growth, with a 30% growth target for 2001.
In June 2001, Global Crossing completed its core network, spanning four continents, 27 countries, and 200 major cities, and on June 29 it completed the sale of its local telephone-company business. Casey's confidence in the company's strength seemed to sustain that of investors, but third-quarter filings for 2001 were considered disappointing, and Global Crossing announced plans to dispose of Global Marine.
Global Crossing's stock price had fallen to $5 by November 2001, and in January 2002 the company filed for Chapter 11 bankruptcy protection. Its assets were ultimately sold to Asia Netcom, a subsidiary of China Netcom. At the same time, Global Crossing filed a letter of intent to sell 79% of the company to a joint venture between Hong Kong-based Hutchison Whampoa and Singapore Technologies Telemedia (ST Telemedia). The bankruptcy filing listed total assets of $22.4 billion and debts of $12.4 billion. Ranked by assets, this is the seventh largest filing in American history.
On January 28, 2002, Global Crossing announced that it had signed a letter of intent with Hutchison Whampoa and ST Telemedia for a cash investment in a joint majority stake in the company's equity in connection with a restructuring of the company's balance sheet. In April 2003, ST Telemedia that announced it would assume the rights and obligations of Hutchison Whampoa to invest in Global Crossing, increasing its original investment of 61.5% ownership interest in the reorganized Global Crossing.
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