Posted on 02/21/2002 5:10:24 AM PST by aShepard
Deal's Loose Ends Are Tied to Global Crossing By SIMON ROMERO with GERALDINE FABRIKANT Graphic: The Singapore Connection Even as Global Crossing was careering toward a financial collapse last fall, its chairman and a member of its board were arranging a complex side deal with a Singapore investment firm that has ties to an Asian alliance now trying to buy Global Crossing out of bankruptcy.
The deal, which the two executives conducted without officially informing other board members, may have given the chairman, Gary Winnick, and the director involved, Steven J. Green, opportunities to benefit in ways not available to other executives or to creditors and shareholders of Global Crossing, a giant communications company.
Nor was the deal disclosed to creditors or shareholders last month when a $750 million joint offer for Global Crossing's assets was made by Singapore Technologies Telemedia and Hutchison Whampoa (news/quote), one of Hong Kong's biggest companies. Singapore Technologies is wholly owned by the same government-owned company, Temasek Holdings, that effectively controls the Singapore firm in which Mr. Winnick and Mr. Green invested.
Failure to fully notify the board when they made their Singapore deal, or to disclose it in the bankruptcy proceedings, were serious lapses on the part of Mr. Winnick and Mr. Green in the view of some corporate management and bankruptcy experts.
"You would want to be certain the chairman was acting responsibly with the shareholders of Global Crossing," said Michael Useem, professor of management at the Wharton School of the University of Pennsylvania. "That would require more thorough disclosure of what was happening."
Yesterday, Mr. Winnick, through a spokesman, and Mr. Green, in a telephone interview, confirmed the details of their Singapore deal, in which the two men acquired a 13.4 percent stake in the Singapore investment firm, K1 Ventures, for about $25 million. But they both said there was nothing inappropriate in their handling of the transaction.
Mr. Green said that he had informally told other directors of the K1 Ventures investment but that he did not tell them about the firm's corporate ties to Singapore Technologies. A spokesman for Mr. Winnick said the board had knowledge of the K1 Ventures deal but that it was not a subject of formal discussion.
In any case, the transaction shows how Mr. Winnick was cementing relationships in the Far East while Global Crossing executives were still publicly affirming that the company was not in danger of collapsing. "Bankruptcy is not a possibility at all," John J. Legere, the chief executive said in an interview last October, a month after Mr. Winnick and Mr. Green made the Singapore investment.
The role of Mr. Green in the deal is noteworthy because until February 2001 he was the United States ambassador to Singapore, appointed by the Clinton administration in 1997.(Interesting!)
As Global Crossing's financial problems were mounting and its share price was collapsing in 2001, Mr. Green joined the board of the company's Asian unit in April, became a member of the Global Crossing board in August and then, in September, made the investment with Mr. Winnick in K1 Ventures.
Each man put up about $12.5 million for his K1 Ventures stake — Mr. Winnick through his investment company, the Pacific Capital Group, and Mr. Green through his investment unit, Greenstreet. Mr. Green became the chairman and chief executive of K1 Ventures.
The chairman and founder of the Hong Kong bidder for Global Crossing, Hutchison Whampoa, is the billionaire Li Ka-shing, who has been acquainted with Mr. Winnick for some time and was introduced to Mr. Green by Mr. Winnick last year.
Global Crossing's bankruptcy filing three weeks ago was the fourth largest on record, based on the $22.4 billion in assets the company listed. It completely wiped out the value of shares held by investors, whose stock had been worth $64.25 a share at its peak in 1999. And holders of $12.4 billion in debt are likely to come away with no more than pennies on the dollar.
Mr. Winnick, however, has already taken at least $730 million out of the company, based on stock transactions since Global Crossing went public in 1998.
Mr. Winnick and Mr. Green said they would not receive any direct financial benefits through their K1 Ventures investment if the Asian companies acquire Global Crossing. And both men rejected the suggestion yesterday that their involvement in K1 Ventures might be a veiled effort to retain influence at Global Crossing if it winds up in the hands of Singapore Technologies and Hutchison Whampoa.
"It would not give Gary or me a back-door entry into ownership of Global Crossing," Mr. Green said in a phone interview from his office in Miami. Mr. Winnick said through a spokesman that he did not expect to get any equity in Global Crossing from his investment in K1 Ventures.
It is not clear, though, whether Mr. Winnick would remain Global Crossing's chairman or whether Mr. Green would remain on its board, since such decisions would be up to whoever winds up controlling the company. But if either man has a desire to remain involved, his indirect links to Singapore Technologies and his association with Mr. Li might give him channels for making his desires known.
Melinda Liu, a spokeswoman for Singapore Technologies, said today that it operated as a separate company from K1, although both are ultimately controlled by Temasek. Ms. Liu added that Singapore Technologies was still interested in acquiring Global Crossing. Hutchison Whampoa was unavailable for comment.
As Global Crossing's financial situation was reaching a crisis last fall, Mr. Winnick and Mr. Green traveled to Singapore at least twice, in November and December, to meet with representatives from Singapore Technologies Telemedia, according to people close to Global Crossing. Moreover, Mr. Green held a dinner party in Shanghai in October, during the gathering of the Asia Pacific Economic Cooperation group, at which the dinner guests included representatives from Singapore Technologies, those people said.
Mr. Green, who has known Mr. Winnick for 20 years, said he checked with the State Department after leaving his ambassador's post last year and was told it would be fine to conduct business in Singapore on the condition that he not represent Singapore entities in dealings with the United States government. A State Department spokesman declined to comment yesterday on Mr. Green's Singapore dealings.
The takeover proposal by Singapore Technologies Telemedia and Hutchison Whampoa has created other complications, with some members of Congress voicing concern over the acquisition of such a large telecommunications company by foreign concerns.
The proposed takeover and Global Crossing's bankruptcy filing have also delayed the awarding of a $450 million contract to provide fast Internet services to the Defense Department. Global Crossing won that contract last year, but protests from other bidders caused the Defense Department to withdraw the award.
The Defense Department had been expected to announce the winner of the contract last month, just days before Global Crossing filed for bankruptcy. But bidders now say the Pentagon has delayed the awarding of the contract until next month.
Hamilton, Bermuda - November 27, 2001 - Global Crossing Ltd., (NYSE: GX), and Asia Global Crossing Ltd., (NYSE: AX), announced today changes to their respective boards of directors to reduce the number of overlapping directors.
The Global Crossing board of directors is now comprised of: Gary Winnick, chairman; Lod Cook, co-chairman; John Legere; Joseph P. Clayton, Mark L. Attanasio. William S. Cohen, Steven J. Green; Maria Elena Lagomasino; and Geoffrey J.W. Kent. Norman Brownstein and Eric Hippeau have resigned from the Global Crossing board.
The Asia Global Crossing board of directors is now comprised of: Gary Winnick, chairman; Lod Cook, co-chairman; Jack Scanlon, vice chairman; John Legere; Norman Brownstein; Eric Hippeau; and Pieter Knook. Mark L. Attanasio, Joseph P. Clayton, William S. Cohen, Geoffrey J.W. Kent, Steven J. Green, and Maria Elena Lagomasino have resigned from the Asia Global Crossing board.
"....overlapping directors...." LOL! Don't know why, but that strikes me funny. Need more sleep.
Guess they "forgot" to list him {{{{smirk}}}}}
Norman Brownstein, VP of AIPAC
Lodwrick Cook, Chrman of Pacific Capital Group (sub of Global Crossing), former CEO, Atlantic Richfield
Clint Walker(former Chrmn of Pacific Capital)
Mr. Walker joined Clarity Partners in October 2000. Prior to joining Clarity, from 1998 to 2000, Mr. Walker was the Vice President of Corporate Development at Global Crossing focusing on mergers and acquisitions, strategic investments and corporate strategy. While at Global Crossing, Mr. Walker was directly involved in approximately $24 billion of completed transactions including: Frontier, Global Marine, Hutchison Whampoa, Racal, Asia Global Crossing, IXnet, and GlobalCenter/Exodus.Prior to Global Crossing, Mr. Walker was a Vice President at Pacific Capital Group from 1994 to 1998, the private equity firm established by Global Crossing Chairman, Gary Winnick, where he participated in numerous transactions including the formation of OpTel and Campuslink. From 1985 to 1994, Mr. Walker worked at Price Waterhouse in the Corporate Finance Group and Entrepreneurial Services Group. Mr. Walker holds a BBA degree from Pacific Union College and is a Certified Public Accountant. Mr. Walker currently serves as a director on the board of Tornado Development.John Legere: Dell Computer
The whistle-blowing accountant for Global Crossing, Roy Olofson, came from Price Waterhouse as did Walker. Also interesting to note is a related company, American Fiber Systems. Their management team is made of of several Global Crossing retreads and a Price Waterhouse accountant who also worked for Global Crossing. Corporate incest?
Also, one of their "Orange" wireless companies (Australia) have an ex-Andersen exec. sitting in an executive position (a la Liberace). This deal needs very close scrutiny...
I wonder whether there will be any Anderson partner equity to pay Global's creditors, after the Enron meatgrinder gets done with them???
Maybe all of you could sent your data going back to the FBI re the ChiCom involvement with the bent one even before he became the governor of the third world state, Arkrazy.
We live in a strange world.
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