The Drexel Connection at Global Crossing (How the firm's alumni helped launch the telecom startup )

BusinessWeek ^ | MARCH 11, 2002 | By Christopher Palmeri in Los Angeles, with Mark Clifford in Hong Kong and Mike McNamee in Wash.

[jern]

A swanky office in Beverly Hills, brash investment bankers scoring hundred-million-dollar paydays, a spectacular collapse ending in federal investigations. The belly flop of Global Crossing Ltd. seems remarkably similar to the saga of Drexel Burnham Lambert Inc., the investment bank that imploded a dozen years ago. In fact, it may be more than coincidence. At least five key players in the startup of Global Crossing were prominent executives at Drexel.

[jern]

MARCH, 1997
Gary Winnick, a former Drexel exec, and CIBC are brought together by Bruce Raben, a dealmaker for the bank in L.A. who also worked for Drexel. CIBC pays $41 million for a 25% stake in Global.

AUGUST, 1998
Global sells stock to the public, valuing CIBC's stake at $926 million. Of the 19-member board, 3 out of 5 CIBC seats are filled by Drexel alums.

JUNE, 2000
All CIBC directors have resigned.

OCTOBER, 2000
CIBC hedges on Global; locks in gains of about $800 million.

FEBRUARY, 2002
To date, CIBC has sold $1.3 billion worth of Global shares. It has locked in profits on an additional $300 million, yet to be realized. Write-offs on loans and preferred shares may hit $242 million, however.

[terilyn]

Great article - Businessweek even? Where is congress on this one?

Ping!

[terilyn]

Ping

[Ernest_at_the_Beach]

A canadian connection to the Chinese company Hutchison? What is going on here?

GlobalCrossing :

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[billbears]

Great article. I wish somebody, anybody would cover GC. I've been watching the major three for the first few minutes of their evening news broadcasts for a hint about GC lately and haven't seen a thing. I know, I know, what should I expect? But ten minutes a night on Enron when there's nothing really there anymore and it's getting ridiculous. I think Rather would cover Chandra Levy before he would cover Global Crossings

[lakey]

Deeper and deeper.

[lentulusgracchus]

Leon Black, who used to be No. 3 in Milken's bond trading organization within Drexel, went on to found Apollo Group, which did a deal with California insurance commissioner Garamendi for the First Executive junk-bond portfolio seized by Garamendi to insure that California annuitants would be made whole. Black paid maybe half what the portfolio was worth, maybe less -- and Garamendi let him have it for that, since his own objectives didn't include getting full market value for the portfolio, but only taking care of the California voters who were exposed.

Apollo went on to purchase Allright Auto Park, the big urban parking-lot outfit. Notice parking rates going up? That's Leon Black in your pocket again.

[Free the USA]

bttt

[Registered]

Now,we need the hard evidence of how the capitalist pig ;-) Terry McAuliffe figures in this deal...

[Registered]

An e-mail to the DRUDGE REPORT on Global Crossing:

I am a consistent reader of the Drudge Report and listen to your nationwide radio program.

I am a shareholder of Global Crossing and I believe there is something terribly wrong with the whole scenario - Gary Winnick's huge profits Vs calming public statements to Shareholders, the yearly turnover of CEO's, Gary Winnick's cronies making up the BOD and that BOD not protecting Shareholders, the public statements of the most recent CEO, John Legere, Vs the bankruptcy announcement on Monday, the deal with the Chinese buying the Company for pennies - 750 million for a 22.4 BILLION dollar company - (Will our government and other major firms use this service owned by a Chinese Co.?), Andersen's involvement -- the confusing balance sheets — the lending institutions being duped, and the obvious profiting and involvement of political figures.

I hope your considerable influence will affect the bankruptcy judge, Robert E. Gerber, to deny the petition.

Sir, I can assure you that every employee and shareholder appreciates your involvement -- the little guy has suffered enough.

[Major Matt Mason]

A canadian connection to the Chinese company Hutchison? What is going on here?

Have you been to Toronto lately? The place is crawling with Chinese.

[prognostigaator]

^

[Registered]

Is the lack of bumps for this thread an indication that FReepers don't care?

[dalereed]

"Have you been to Toronto lately? The place is crawling with Chinese."

In the 70s, Canada imported 10,000 Chinese Red Guard.

[Tumbleweed_Connection]

Thanks.

[beckett]

When is Waxman going to haul Winnick before his committee for a public caning?

[lilylangtree]

All right, Congress, it's now time to take a real hard look at Global and not just Enron. It's hearings. Where's GAO when you need them? GAO pretends to be the investigative arm of Congress. Right! And there are a lot of Peter Pans flying around.

[OldFriend]

Dems in congress waiting for the next fax from Terry McAwful. Senator LIEberman gave McAwful his blessings for his insider dealing so don't expect much from the dems.

[terilyn]

You're right, I know.

I too am anxiously awaiting McCauliffe's next fax chock full of dem talking points. Plans A, B(1), B(2), B(3), and B(4), have failed. (See the thread here that 3/4 of Americans believe that America WILL Succeed vs the War on Terror). So much for Daschle's last doom and gloom prediction. I can hardly wait to see what suicidal plan they'll come up with next.

[Bayou City]

Is the lack of bumps for this thread an indication that FReepers don't care?

A bump for those that care!