Global Crossing has been trading actively this week in the 201/2-21 context, up about a point from where the paper had come to rest for the last couple of months. Traders said the news that Hutchison Whampoa's Hutchison Telecommunications has decided to bow out of its agreement to acquire Global Crossing alongside partner Singapore Technologies Telemedia has cleared the way for bankruptcy emergence and propped the bank debt. The bank debt is ticking up toward its ultimate take-out value of roughly 23 cents on the dollar, explained one dealer.
Hutchison's and ST Telemedia's purchase agreement for Global Crossing was constructed so that either investor could take over the other's stake under the circumstances that one of the parties withdrew. ST Telemedia will therefore fulfill Hutchison's investment pledge of $125 million for an additional 30.75% stake in the reorganized company and there will be no changes to the distributions allotted to creditors.
Hong Kong-based Hutchison was said to be getting stiff resistance from the Committee on Foreign Investment in the U.S., given the current state of national security concerns. ST Telemedia is expected to get a different reception as the sole investor. "It's a world of difference," said an attorney working on the company's bankruptcy case. A Global Crossing spokeswoman declined to comment on the bank debt trades, but said the company believes this was the best decision to clear the path to bankruptcy emergence.