Winnick in Global Crossing rescue bid

Global Crossing founder Gary Winnick is trying to coax investors to support a management plan to restructure the international fibre-optic and telecommunications company whose downfall has been laid at his feet by bitter shareholders.

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By  Richard Brown Published  June 10, 2002

According to the Wall Street Journal, former junk bond salesman Winnick has approached private-equity firms and other potential investors in a bid to raise over $1 billion to rescue the firm from Chapter 11 bankruptcy-court protection, the fourth-largest filing in U.S. history.

Winnick has reportedly told investors he would be willing to contribute as much as $100 million of his own money under the right circumstances. To the ire of many investors, Winnick sold $735 million of Global Crossing shares from his personal holdings. The firm is under SEC scrutiny for possible securities-law violations.

The rescue plan calls for the sale of several Global Crossing assets, including its conferencing operations, its UK fibre-optic network and its Global Marine cable-laying division, worth upto $1 billion. The ambition would then be to recapitalise Global Crossing with an additional $500 million from investors.

Founded in 1997, Bermuda-based Global Crossing constructed an undersea phone network that connected 27 countries and 200 cities and boasted a market capitalisation of $48 billion. Saddled with too much debt, Global Crossing filed for bankruptcy protection in January.

Though Global Crossing does not have any termination points for its fibre optic network in the Middle East, it shares Chapter 11 protection status with FLAG Telecom, the carrier in which Saudi Telecom holds a substantial stake and whose fibre optic terminals many regional telcos use.

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