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Global Crossing

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Global Crossing Limited
IndustryTelecommunications
FoundedMarch 1997;27 years ago(1997-03)
DefunctOctober 3, 2011;12 years ago(2011-10-03)
FateAcquired byLevel 3 Communicationswhich was acquired byCenturyLink(nowLumen Technologies)
HeadquartersHamilton, Bermuda
Key people
John Legere,CEO
RevenueUS$2.536 billion (2009)
-US$141 million (2009)
Number of employees
5,235 (2009)
Footnotes / references
[1]

Global Crossing Limited,was atelecommunicationscompany that providedcomputer networkingservices and operated atier 1 carrier.It maintained a largebackbone networkand offeredpeering,virtual private networks,leased lines, audio and video conferencing, long-distance telephone,managed services,dialup,colocation centresandVoIP.Its customer base ranged from individuals to large enterprises and other carriers, with emphasis on higher-margin layered services such as managed services and VoIP with leased lines. Its core network delivered services to more than 700 cities in more than 70 countries.[2]

Global Crossing was the first global communications provider withIPv6natively deployed in both its private and public networks.[3]It was legally domiciled inBermudaand had its administrative headquarters inNew Jersey.[citation needed]

In 1999, during thedot-com bubble,the company was valued at $47 billion, but it never had a profitable year.[4][5]In 2002, the company filed for one of the largest bankruptcies in history and its executives were accused of covering up anaccounting scandal.[6]On October 3, 2011, Global Crossing was acquired byLevel 3 Communicationsfor $3 billion, including the assumption of $1.1 billion in debt.[7]

History[edit]

Founding and early growth[edit]

In March 1997, Global Crossing was founded byGary Winnick,the former manager of the bond desk ofDrexel Burnham Lambert,and his Drexel colleagues who moved on to work atCanadian Imperial Bank of Commerce(CIBC): Abbott L. Brown,David L. Lee,and Barry Porter. In 1997, the company raised $35 million, including investments by Winnick and theCIBC Argosy Merchant Funds(laterTrimaran Capital Partners).[citation needed]Winnick was chairman of the company from 1997 until 2002. In 1998, he hiredLodwrick Cook,formerCEOofAtlantic Richfield Company,as co-chairman.[8]John Scanlon became the first CEO of the company in the same year, but was replaced in March 1999 by Robert Annunziata, who had resigned as president ofAT&T Corporation's Business Services group to "build a company from start to finish".[9][10]

In May 1999, Global Crossing made an offer to acquireUS West,[11]but was outbid byQwest.[12]In July 1999, the company acquiredGlobal Marine Systems,the undersea cable maintenance arm ofCable & Wireless,for $885 million.[10]Later that year, in September 1999, the company acquiredFrontier Communications,the formerRochester Telephone Corporation,for $9.9 billion and renamed it Global Crossing North America.[13]That same month, Global Crossing acquired 49% of SB Submarine Systems,[10]and formed Asia Global Crossing, a $1.3 billion joint venture withSoftBank GroupandMicrosoftto build a fiber-optic network in Asia linking Japan, China, Singapore, Hong Kong, Taiwan, South Korea, Malaysia and the Philippines.[14][10]In November 1999, Global Crossing acquiredRacal Telecomfor $1.65 billion.[15]

In January 2000, the company formed a 50/50 joint venture withHutchison Whampoa,valued at $1.2 billion, for a fiber-optic network in Hong Kong.[16]In March 2000, Annunziata resigned, receiving $160 million during his 13-month tenure.[17]Leo Hindery,who had joined the company a few months earlier as head of its web hosting division, GlobalCenter, then became CEO.[citation needed]In September 2000, the company announced a deal to sell GlobalCenter toExodus Communicationsfor $6.5 billion in stock. By the time the deal closed in January 2001, the stock was only worth $1.95 billion.[18]Hindery then resigned as CEO and was replaced with Thomas Casey, a lawyer who came to Global Crossing fromMerrill Lynch,where he was co-head of the global telecom investment banking group.[19]For the year 2000, the company lost $1.4 billion.[4]

In 2001, the company sold its local telephone operations and the Frontier name in 2001 to Frontier Communications for $3.65 billion in cash.[20]In the summer of 2001, the company began discussing a transaction withEnronin which the company would pay Enron $650 million for its fiber-optic network in exchange for Enron paying the company $650 million to use the network, a move that would boost both companies' revenues without costing them anything. The transaction did not materialize.[4]In October 2001, Casey was replaced byJohn Legere,the CEO of Global Crossing subsidiary Asia Global Crossing.[21]

Bankruptcy and reemergence[edit]

In the fourth quarter of 2001, the company lost $3.4 billion on revenue of $793 million. In January 2002, the company filedbankruptcy.It listed total assets of $22.4 billion and debts of $12.4 billion and was paying annual interest of $600 million.[5][22]As part of the bankruptcy,Hutchison WhampoaandST Telemediaagreed to invest $750 million in the company.[23]Hutchinson Whampoa later pulled out of the deal due to regulatory resistance.[24]

CIBC realized an estimated gain of $2 billion from its relatively small equity investment in the company, making it one of the most profitable investments by a financial institution in the 1990s.[25][26]Winnick salvaged $735 million from his $20 million investment, although his interest was worth $6 billion on paper at its peak.[4]

In April 2002, Hutchinson Whampoa bought the company's 50% interest in the Hong Kong joint venture for $120 million.[27]

In November 2002, Global Crossing's Asian subsidiary, Asia Global Crossing, filed bankruptcy and sold its assets to Asia Netcom, a subsidiary ofChina Netcom.[28]

Between 1998 and 2001, Winnick sold approximately $420 million in company stock and other executives sold an additional $900 million in company stock.[29]

On December 9, 2003, the company emerged from bankruptcy and on April 1, 2004, the company once again became apublic company.[30]

In March 2004, Gary Winnick and other ex-executives settled lawsuits filed by investors and former employees accusing the executives of committingsecurities fraudby using improper accounting to inflate the company's revenue.[6]

In October 2006, the company announced the acquisition of UK-basedFibernet Corp.for £49.8 million.[31]

In May 2007, the company acquired Impsat,[3]a leading Argentine telecommunications company. Global Crossing and Impsat have had a commercial relationship since 2000, when Global Crossing selected Impsat as one of its providers of Point of Presence (PoP) facilities for Global Crossing's Latin American network, known as South American Crossing. Impsat has also been a customer of Global Crossing in Latin America since 2000.[citation needed]

In October 2011, Level 3 Communications acquired the company for $3 billion, including the assumption of $1.1 billion in debt.[7]

Controversies[edit]

Political activity[edit]

The company contributed $250,000 to each of the2000 Republican National Conventionand the2000 Democratic National Conventionand made major contributions to politicians of both parties. The company also courted politicians to invest in the company. The company hiredlobbyistand formerUnited States Assistant Attorney GeneralAnne Bingaman, married to Democratic New Mexico SenatorJeff Bingaman,paying her $2.5 million between January and June 1999 to try to block licensing of an AT&T, MCI, and Sprint consortium to lay cable from the U.S. to Japan.[32][33]

Executive bonuses[edit]

Despite the massive layoffs, unpaid employees, and cancelled pensions as a result of the bankruptcy, executives received huge bonuses and loan relief.[34]

Russian submarine rescue[edit]

In August 2000, the company was involved in an attempted rescue of a Russian submarine during theKursk submarine disaster.[35]Global Crossing's undersea cable division contracted with British Defense Ministry to operate theLR5rescue submersible. As part of the agreement, Global Crossing was to keep it on call for emergencies.[citation needed]

References[edit]

  1. ^"Global Crossing Limited Offer To Exchange Up To $750,000,000 12% Senior Secured Notes due 2015 which have been registered under the Securities Act of 1933 for any and all outstanding 12% Senior Secured Notes due 2015".U.S. Securities and Exchange Commission.Archivedfrom the original on 2018-05-05.Retrieved2018-05-05.
  2. ^"Level 3 to Acquire Global Crossing"(Press release).Business Wire.April 11, 2011.Archivedfrom the original on May 6, 2018.RetrievedMay 5,2018.
  3. ^ab"Global Crossing Completes Acquisition of Impsat"(Press release).Thomas Register.May 22, 2007.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  4. ^abcdO'BRIEN, TIMOTHY L. (August 15, 2004)."A New Legal Chapter for a 90's Flameout".The New York Times.Archivedfrom the original on 2015-05-28.
  5. ^abStern, Christopher (January 29, 2002)."Global Crossing Files for Bankruptcy".The Washington Post.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  6. ^abPham, Alex; Colker, David (March 20, 2004)."Global Crossing Ex-Execs to Pay $324 Million".Los Angeles Times.
  7. ^ab"Level 3 Completes Acquisition of Global Crossing"(Press release).PR Newswire.October 4, 2011.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  8. ^"The Rise And Fall Of Global Dreams".The New York Times.March 3, 2002.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  9. ^HOLSON, LAURA M. (October 12, 2000)."Fast Times at Global Crossing; Enjoying the Spotlight While Building An Upstart in Telecommunications".The New York Times.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  10. ^abcdBulkley, Kate (November 17, 1999)."Corporate profile: Global Crossing - His company is two years old. But it's already worth pounds 20bn".The Independent.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  11. ^"US West, Global Crossing tie".CNN.May 17, 1999.Archivedfrom the original on June 30, 2019.RetrievedJune 30,2019.
  12. ^Blumenstein, Rebecca (July 19, 1999)."Qwest Wins U S West for $35 Billion, Ending Duel With Global Crossing".The Wall Street Journal.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  13. ^"Global Crossing completes merger with Frontier".Marketwatch.September 28, 1999.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  14. ^SCHIESEL, SETH (September 8, 1999)."Microsoft to Join Fiber Optic Venture in Asia".The New York Times.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  15. ^"Global Crossing Completes Acquisition of Racal Telecom"(Press release).Business Wire.November 24, 1999. Archived fromthe originalon May 5, 2018.RetrievedMay 5,2018.
  16. ^"Hutchison Whampoa and Global Crossing Complete Telecom Joint Venture in Hong Kong"(Press release).Hutchison Whampoa.January 10, 2000.Archivedfrom the original on January 10, 2018.RetrievedMay 5,2018.
  17. ^Douglass, Elizabeth (March 18, 2000)."Global Crossing's Annunziata Gets $160 Million for 13 Months on Job".Los Angeles Times.Archivedfrom the original on June 30, 2019.RetrievedJune 30,2019.
  18. ^Douglass, Elizabeth (October 14, 2001)."Global's Lost Connection".Los Angeles Times.Archivedfrom the original on June 30, 2019.RetrievedJune 30,2019.
  19. ^"Global Crossing CEO out".CNN.October 11, 2000.Archivedfrom the original on June 30, 2019.RetrievedJune 30,2019.
  20. ^Bartash, Jeffry (July 12, 2000)."Global Crossing sells local business".Marketwatch.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  21. ^McLean, Heather (October 5, 2001)."Global Crossing gets fourth CEO in two years".ZDNet.
  22. ^Bartash, Jeffry (January 29, 2002)."Anatomy of Global Crossing's failure".Marketwatch.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  23. ^"Global files for bankruptcy".CNN.January 28, 2002.Archivedfrom the original on June 30, 2019.RetrievedJune 30,2019.
  24. ^KOLESNIKOV, SONIA (April 30, 2003)."ST Telemedia to buy Global Crossing stake".United Press International.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  25. ^FABRIKANT, GERALDINE; ROMERO, SIMON (February 11, 2002)."How Executives Prospered as Global Crossing Collapsed".The New York Times.Archivedfrom the original on March 22, 2017.RetrievedFebruary 19,2017.
  26. ^"The Drexel Connection at Global Crossing".Bloomberg News.March 11, 2002.Archivedfrom the original on 2018-05-06.Retrieved2018-05-05.
  27. ^"Hutchison acquires Asia Global Crossing's interest in Hong Kong joint ventures for US$120 Million"(Press release).Hutchinson Whampoa.April 29, 2002.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  28. ^Granelli, James S.; DOUGLASS, ELIZABETH (November 18, 2002)."Asia Global Crossing Files for Bankruptcy".Los Angeles Times.Archivedfrom the original on June 30, 2019.RetrievedJune 30,2019.
  29. ^Hopkins, Jim; Krantz, Matt (February 26, 2002)."Global's warning signs there, Wall St. was unaware".USA Today.Archivedfrom the original on 2018-11-05.Retrieved2018-05-05.
  30. ^"Global Crossing Stock to Begin Trading on NASDAQ National Market Today"(Press release).ST Telemedia.April 1, 2004.Archivedfrom the original on June 30, 2019.RetrievedJune 30,2019.
  31. ^Lomas, Natasha (October 11, 2006)."Global Crossing snaps up Fibernet".ZDNet.
  32. ^Ackman, Dan (March 13, 2002)."House Committees To Investigate Global Crossing".Forbes.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  33. ^Hamburger, Tom; Harwood, John (March 4, 2002)."Global Crossing Got Little in Return For Its Big Political Contributions".The Wall Street Journal.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  34. ^Blumenstein, Rebecca; Solomon, Deborah; Chen, Kathy (February 21, 2002)."Global Crossing Cosseted Executives As Pink Slips Loomed, Stock Fell".The Wall Street Journal.Archivedfrom the original on May 5, 2018.RetrievedMay 5,2018.
  35. ^Douglass, Elizabeth (August 19, 2000)."Rescue Mission Steers Craft Operator Into Uncharted Waters".Los Angeles Times.Archivedfrom the original on June 30, 2019.RetrievedJune 30,2019.
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