Bidding war over Global Crossing

26 Feb 2003

A bidding war has erupted for the assets of bankrupt international broadband carrier Global Crossing, into which the Irish government has ploughed €126m over the past few years in order to boost the country’s international connectvity.

Hong Kong’s Hutchison Whampoa Ltd and Singapore Technologies Telemedia Pte have jointly bid for the company, promising an instant US$250m cash fusion for cash-strapped Global Crossing.

An anxious Global Crossing is understood to have agreed in January to give control of the company to the two investors in order to avoid one of the biggest bankruptcy proceedings in history. Global Crossing’s estimated assets are understood to be worth over US$22bn.

However, citing US national security, US telco IDT Corp is understood to have mounted a rival US$255m all-stock bid to acquire Global Crossing’s high-speed network.

The new offer is to be presented to the US Federal Bankruptcy Court next week for approval.

National security concerns about the sale of the network – which carries all the confidential data of the Justice Department, FBI and CIA around the world – were prompted by the fact that Hutchison Whampoa is a Hong Kong-based organisation, a city now firmly in the hands of China.

The Irish government entered into an agreement in 1999 with Global Crossing to establish a major fibre optic connection point at Citywest in Dublin, under a US$126m deal to provide telecoms connectivity to Irish firms as well as multinationals based in Ireland.

However, so far only a few Irish firms have expressed an interest in using the Global Crossing network.

By John Kennedy