Gores Technology Group, a Los Angeles investment firm run by Alec Gores that specializes in buying distressed technology companies, is preparing a bid for Global Crossing, according to report in the Los Angeles Times yesterday.
The offer would be the third bid for Global Crossing, which ran up massive debts building a global telecommunications network which impressed SWIFT sufficiently for the Brussels-based financial messaging co-operative to out-source its network to the company. Now the deal has become a serious embarrassment for SWIFT, which is understood to be searching frantically for an alternative supplier. Global Crossing filed for Chapter 11 in [January] with debts of $12.3 billion. Global Crossing is also under investigation by the Securities and Exchange Commission and the FBI over alleged accounting misdemeanors designed to conceal its financial difficulties.
An earlier $750 million bid for Global Crossing [LINK] from Hutchison Whampoa and Singapore Technologies Telemedia, two companies that already hold interests in Global Crossing, has run into criticism from existing shareholders, who would lose everything. Global Crossing Rescue Plan Fleet National Bank, a major creditor of Global Crossing owed $77 million, has said the price is too low and the proposed deal “may be tainted by collusion and self-dealing.” This last comment is a reference to revelations by the New York Times that two Global Crossing directors, including chairman and founder Gary Winnick, secretly invested $25 million in a firm effectively controlled by Singapore Technologies. Fleet also objected in its filing to termination and expense reimbursement fees of $50 million promised to Hutchison and Singapore Technologies, which it said amounts to 33 percent of the net cash offered creditors.
The only other bid for Global Crossing has come from a shareholders group that said it would raise $5.5 billion over three years to repay creditors. More substantial bidders from the ranks of established telecommunications suppliers are expected to emerge.