Global Crossing May Be Attractive to Private Equity (Update5)
By Amy Thomson
April 3 (Bloomberg) -- Global Crossing Ltd. may be attractive to private equity firms as it wins more customers for the fiber-optic network that forced the company into bankruptcy five years ago, Chief Executive Officer John Legere said.
Temasek Holdings Pte, the Hamilton, Bermuda-based company's majority owner, has no immediate reason to sell its stake, Legere said in an interview. Global Crossing is in a ``good spot'' as the company improves its balance sheet and expands sales after a $324 million loss last year, he said.
``There are huge amounts of liquidity in the private equity space,'' Legere said. ``Things previously you would have had to discount as a ridiculous rumor, you now have to take seriously. Any logical investment is not too big.''
Global Crossing's network connects overseas phone calls for customers including AT&T Inc. and Verizon Communications Inc. Its close connections with these companies may make it interesting to a private equity firm, which would be likely to invest more quickly than a telecommunications company, Legere said.
Shares of Global Crossing have risen 11 percent this year. They slipped 1 cent to $27.20 at 4 p.m. New York time in Nasdaq Stock Market trading.
Temasek, Singapore's state-owned investment arm, holds about 57 percent of the company's common and preferred shares, according to Global Crossing spokeswoman Rebecca Yeamans.
Temasek in an e-mailed statement referred queries to its unit Singapore Technologies Telemedia Pte., which holds the company's Global Crossing stake.
``Global Crossing is a strategic holding and we're pleased with its business progress,'' ST Telemedia spokeswoman Melinda Tan said by e-mail. ``ST Telemedia remains committed to the company's efforts to achieve sustainable success.''
Better Performance
Temasek probably won't sell its stake until Global Crossing improves its performance, which may be a year and a half from now, said Donna Jaegers, an analyst at Janco Partners Inc. in Denver. She rates the shares ``accumulate'' and doesn't own any.
``They still have a fairly high cost structure and they need to win more revenue,'' Jaegers said in an interview. ``They just still have too many people with not enough productivity.''
Global Crossing filed for bankruptcy protection in January 2002 after worldwide fiber-optic construction drove down the cost of transferring data over high-speed networks. When customers failed to surface and sources of capital dried up, the company's sales fell and $12.4 billion in debt piled up.
The bankruptcy was the seventh-biggest in the U.S. since 1980, according to data compiled by Boston-based New Generation Research Inc.
Previous Bankruptcy
Global Crossing emerged from bankruptcy in 2003 and last quarter recorded its first sales gain since that time. Chief Financial Officer Jean Mandeville said improving cash flow and lower expenses are pushing Global Crossing toward profitability. He wouldn't say when the company would report net income.
``We continue to grow our revenue,'' he said in an interview. ``We have again access to the capital markets which more than a year ago were closed.''
The company raised additional funds selling stock, bonds and convertible notes during 2006. Global Crossing predicts revenue of as much as $2.25 billion this year, up from $1.87 billion in 2006.
``When you face extinction the way we do, you get humble and you get a different culture,'' Legere said. ``And interestingly the customers really like that.''
To contact the reporter on this story: Amy Thomson in New York at athomson6@bloomberg.net
