XO, Icahn to obtain 1/3 of Global Crossing senior debt (There's a BIG story in here, somewhere!)

CBS MarketWatch.com ^ | Today | Jeffry Bartash

[SierraWasp]

1:35PM XO, Icahn to obtain 1/3 of Global Crossing senior debt by Jeffry Bartash

WASHINGTON (CBS) -- XO Communications on Monday said it's received commitments allowing it to acquire about one-third of the senior secured debt held by creditors of Global Crossing, the bankrupt communications carrier. In a tender offer, XO said creditors holding $495 million in senior secured debt agreed to sell their stakes by the June 27 deadline. That gives XO control of about $795 million of Global Crossing's $2.21 billion in senior secured debt. XO, backed by billionaire Carl Icahn, the noted "corporate raider," is trying to acquire Global Crossing and block an offer by Singapore Technologies Telemedia.

[John_11_25]

Thought you may be interested in this one.

[Liz]

Just unfolding...... Can't believe Icahn is in on it. Who's he fronting for?

[Madcelt]

Ping! Refresh my memory. I getting to old to keep up with this stuff.( Short term memory is the first to go.)

[Calpernia]

Ping

[Calpernia]

That was pttttt, I just pinged him.

[SierraWasp]

Was he the one that had something in the sidebar column for many days? If so, thanks for pinging him. Whoever it was had a strong sense that this was a real stinky situation from beginning to end. And since we've not seen the end, yet...

[SierraWasp]

"IDT said selling Global Crossing to a foreign company could threaten U.S. national security"

Wasn't IDT a company that Jack Kemp has a big interest in?

[pttttt]

IDT said selling Global Crossing to a foreign company could threaten U.S. national security, pointing out that the company carries data for the Justice Department, the Central Intelligence Agency and the Federal Bureau of Investigation.

It's not just IDT. Foreign ownership of telecommunications infrastructure is not taken lightly in many countries - for instance, our usually very liberal neighbor Canada. See http://www.innovationstrategy.gc.ca/cmb/innovation.nsf/MenuE/Invest01 for how Canada and other countries restrict it.

[tortoise]

Who's buying them? Anyone hear anything?

BellSouth is acquiring a buttload of their network, but you didn't hear that from me. (I don't know to the extent this is public yet.)

[tortoise]

More than likely XO is trying to get the choice cuts off the carcass, at bargain basement prices.

You got it. It is a powerplay to effectively buy the company without "buying the company" in the usual sense. The way this normally works is that the person buying up secured debt does a pump-and-dump right into another bankruptcy (with cooperation from the company in question), and thereby ending up with most of the assets without paying hardly anything in real money and leaving the other debt-holders out in the cold. I've already seen this happen a couple times from the inside in the telecom industry. How successful they are depends on how savvy the bankruptcy judge is as well as the lawyers of the other interests, but they will likely end up with a significant prime asset stake.

[I_dmc]

BellSouth Corp. has launched a $65 million bid for bankrupt WorldCom Inc.'s fixed wireless unit, TheDeal.com reported.

http://atlanta.bizjournals.com/atlanta/stories/2003/05/12/daily12.html

[john the bowler]

Insider & Form 144 Filings - XO COMMUNICATIONS INC (OTC BB:XOCM.OB)
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27-Jun-03
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More SEC filings for XOCM.OB available from EDGAR Online | Get a Free Trial to EDGAR Online Premium
Insider & restricted shareholder transactions reported over the last two years
Date Who Shares Transaction
ADVERTISEMENT
2003-01-16 NICHOLLS, JAMIE C.
Beneficial Owner (10% or more) *50,000,000 Disposition (Non Open Market)
2003-01-16 LISTER, THOMAS H.
Beneficial Owner (10% or more) *50,000,000 Disposition (Non Open Market)
2003-01-16 HUTCHINS, WINSTON W.
Beneficial Owner (10% or more) *50,000,000 Disposition (Non Open Market)
2003-01-16 HORBACH, SANDRA J.
Former Director *50,000,000 Disposition (Non Open Market)
2003-01-16 FORSTMANN, THEODORE J.
Beneficial Owner (10% or more) *50,000,000 Disposition (Non Open Market)
2003-01-16 FORSTMANN, THEODORE J.
Beneficial Owner (10% or more) 800,000 Disposition (Non Open Market)
2003-01-16 FORSTMANN L&CO EQ PVLP
Beneficial Owner (10% or more) 50,000,000 Disposition (Non Open Market)
2003-01-16 FLC XXXII PRTSP LP
Beneficial Owner (10% or more) *50,000,000 Disposition (Non Open Market)
2003-01-16 BOWLES, ERSKINE B.
Beneficial Owner (10% or more) *50,000,000 Disposition (Non Open Market)
2003-01-16 TYWANA LLC
Beneficial Owner (10% or more) *50,000,000 Disposition (Non Open Market)

[pttttt]

There was a FReeper who kept this story alive and well for more than a month or two... Who was it? There is something sinister lurking just beneath the surface with this troubling story that just begs to be uncovered!!!

At least two levels of "sinister". One level is a lot of investors (who include employees and their retirements) and creditors getting the shaft, maybe because of accounting fraud and securities fraud.

Then there's a bankruptcy, the investors and creditors lose, the debt is forgiven for pennies on the dollar, and the original securities and employee 401K's are worth zip.

And a network which cost billions of dollars (which came from the above debt, securities, and 401K's) to build is given away to an enterprising bottom-fisher for peanuts (the peanuts are used for the pennies on the dollar to settle with the creditors; common stock holders generally get nothing).

That's how the system works. Being an enterprising bottom-fisher isn't necessarily bad (unless they did something criminal to make the bankruptcy happen, like colluding with the company management prior to bankruptcy). It's easy to see that the bankruptcy process is hard to police and full of opportunities for fraud, and in a 401K-based retirement system the little guy gets nailed if he doesn't watch it or doesn't have a choice on investments.

But bad as that is, there's another level of "sinister" that worries me even more; enemies of the US, getting control of US infrastructure. This is a threat to National Security. What happened with Global Crossing, Hutchison Whampoa, Richard Perle, etc. and what continues to happen with Global Crossing showed that the US government is also struggling with this one.

There's a lot of stuff that the writers of the 1996 Telecommunications Reform Act didn't anticipate.

[SierraWasp]

"There's a lot of stuff that the writers of the 1996 Telecommunications Reform Act didn't anticipate."

You hear it all the time... "Congress never intended..."

The dummies continue to depend on staff to actually read the proposed legislation, then tell their elected boss how to vote! Not that they would do any better if they did read it themselves as they would seldom read for comprehension anyway!!!

Thanks for your insightful recap of this stupifiying situation. Your efforts have been appreciated.

[tortoise]

I understood there was some fiber networks in the mix as well.