IDT Corp mounts rival bid for Global Crossing

US-based multinational carrier IDT Corporation (IDT Corp) [NYSE: IDT] is to submit an offer to acquire defunct telco Global Crossing [GBXNQ.PK] in an attempt to scupper a bid made in August 2002 by Hong Kong conglomerate Hutchison Whampoa and Singapore Technologies Telemedia (STT). Citing national security issues as its primary motivation, IDT Corp is expected to mount a rival USD255 million all-stock offer for Global Crossing’s network, outstripping the earlier cash and stock bid by the Asian companies. Highlighting perhaps the shifting sentiment of US thinking, IDT chairman Howard Jonas said that his company had grave concerns that ‘a foreign telecommunications company based in communist controlled China, is asking our government for control of Global Crossing, which would give them access to some of our government’s and major corporations’ most sensitive phone conversations’.

Prior to this latest development Global Crossing’s long-winded restructuring exercise seemed to have been reaching a conclusion. In January this year it received official sanction from the Bermuda Supreme Court to proceed with its planned reorganisation programme, marking a year since it filed for Chapter 11 bankruptcy protection with debts of USD12.4 billion. In August came the announcement that Hutchison and state-owned STT had tabled a bid to buy into the company at a knock-down rate; for an initial cash injection of USD250 million, the two were set to gain 61.5% of Global Crossing, which has assets of over USD22 billion. In addition, following the reorganisation the Asian firms were to pay Global’s creditors USD300 million in cash and issue USD200 million in fresh debt. On 26 December the US Bankruptcy Court approved Global Crossing’s plan to create a new entity, New Global Crossing, to discharge its debts and offer the mixture of cash and shares to creditors. While the bankruptcy courts have yet to approve the sale of assets, the deal also awaits the significant hurdle of clearing the US regulator.