Global Crossing's bank debt was actively trading in the street last week with small pieces of all tranches trading flat in the 18-19 context. The latest movement comes as reports indicate that IDT Corp. will make a $255 million bid for the bankrupt company. Howard Jonas, IDT's Chairman said in a statement that an IDT purchase of Global Crossing would be good for the United States' economy and national security, whereas the proposed sale to Hutchison Telecommunications Limited and Singapore Technologies Telemedia would compromise security.
Although the bankruptcy court has already confirmed a reorganization plan whereby the Asian investors would invest $250 million in exchange for a 61.5% ownership position, the deal may be running into regulatory barriers. "The deal is troubled," said one buysider, adding that it is a toss up whether the Asian investors' deal will be consummated. Other lenders said it was too soon to tell how the how the current reorganization plan would be affected by this latest development. Calls to Dan Cohrs, Global Crossing cfo, were referred to a spokeswoman, who pointed to a written company statement indicating that the company was still pursuing its confirmed plan of reorganization.
Under the reorganization plan, bank lenders will receive approximately $300 million in cash from an escrow account furnished with the funds that Global Crossing received from the sale of the company'sIPC Trading Systems units to an investment group led by Goldman Sachs Capital Partners in December 2001. In addition, lenders will receive $175 million of new senior secured notes and 2.4 million shares of new common stock. In total, the company expects bank loan and letter of credit lenders to recover almost 22.7% of their original $2.26 billion investment (LMW, 12/23).