- The Washington Times - Thursday, May 9, 2002

NEW YORK (AP) Global Crossing Ltd. released financial estimates for the first quarter yesterday that executives said put the telecommunications company on course to emerge from the fourth-largest bankruptcy ever filed.
"We've done all the heavy lifting," John Legere, chief executive, said in a phone interview from Madison, N.J. "We've significantly cut our cash burn rate, delivered expected revenue and kept our customers."
The company estimated first-quarter sales of $768 million, including $736 million of service revenue, but excluding results from its subsidiary Asia Global Crossing.
Creditors had been told to expect service revenue of $738 million, Mr. Legere said.
Before accounting for interest, taxes, depreciation and amortization, the company lost about $153 million, in line with the $152 million loss creditors had been told to expect, he said.
The target numbers were not released in advance publicly, and Mr. Legere declined to provide any guidance for the second quarter.
The financial results were estimates only. The fiber-optic-network operator has delayed releasing audited 2001 financial results pending investigations of its accounting methods. The Securities and Exchange Commission and the Justice Department are examining how the company booked results in the wake of accusations by a former senior executive that it inflated revenue.
A year earlier, Global Crossing reported a first-quarter loss of $615.9 million on sales of $1.1 billion.
Global Crossing estimated it had a cash balance of $894 million on March 31, which Mr. Legere said was sufficient to take the company through to next year if it did not emerge from bankruptcy protection beforehand.
The company said it added 475 new contracts in the quarter. But Mr. Legere would not say whether there had been a net gain or loss of customers.
"There is no issue of customer erosion," he said.
The company said the layoffs of about 2,000 employees during the last three months, as well as other restructuring steps, would cut operating costs by 42 percent, to about $900 million this year. That compares to operating expenses of $1.6 billion reported in 2001.
More than 60 potential bidders have expressed interest in the company's assets, Mr. Legere said.
While some potential bidders have proposed breaking up Global Crossing's 100,000-mile fiber web that connects more than 200 cities, Mr. Legere said the leading bidders are interested in acquiring the whole company.
Only one formal offer has been made. Bidders have until June 20 to file their offers with the bankruptcy court in Manhattan. An auction is scheduled for July 8.
The single bid, made when Global Crossing filed for bankruptcy protection in January, involves Hutchison Whampoa of Hong Kong and Singapore Technologies Telemedia injecting $750 million for a 79 percent stake in the company. Creditors, owed about $8 billion, would receive the remaining 21 percent and $300 million in cash.
Global Crossing reconfirmed Friday that equity investors, who once valued the company at nearly $50 billion, will likely receive nothing under terms of any restructuring agreement.


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