Global Crossing explains relationships with Exodus
Sept. 26, 2001--Global Crossing Ltd., which provides integrated telecommunications solutions over an integrated global IP-based fiber optic network, released a statement summarizing its relationships with Exodus Communications, Inc.
Global Crossing Ltd., (NYSE:GX), which provides integrated telecommunications solutions over an integrated global IP-based fiber optic network, released a statement summarizing its relationships with Exodus Communications, Inc.
Global Crossing owns approximately 108 million common shares of Exodus. In the second quarter of 2001, Global Crossing announced it was evaluating the carrying value of its equity investment in Exodus. The Company expects to reflect the revaluation of the carrying value of its investment in Exodus as a non-cash charge in its third quarter 2001 statement of operations.
Global Crossing, together with its subsidiary Asia Global Crossing, is also the primary supplier of network services to Exodus, with a ten-year contract to provide at least 50 percent of Exodus's incremental network services outside Asia, and at least 60 percent in Asia. This contract specifies that the supplier relationship would continue in the event of a change of control of Exodus, although the agreement is terminable two years after any acquisition of Exodus by a network provider.
Global Crossing offers web hosting and managed hosting services to its customers through a re-sale agreement with Exodus, but noted that its data service revenue has not been materially affected by this arrangement. In the event that Exodus were unable to offer these services, Global Crossing could provide the services itself or through another supplier. Global Crossing expects the primary driver of growth in its data services to be demand for global IP services, such as global IP virtual private networks and voice over IP, for which its owned and controlled network is uniquely capable.
In connection with the sale of its GlobalCenter subsidiary to Exodus, Global Crossing agreed to guarantee certain obligations relating to real estate leases assumed by Exodus in that transaction. As previously reported in Global Crossing's 10Q report for the second quarter of 2001, on an aggregated basis, the annual lease payments average approximately $70 million per year over the life of the leases. In the opinion of management, in the event that Global Crossing is required to satisfy some or all of the guaranteed lease commitments, annual payments would be significantly reduced to an amount that is not material through negotiated termination of the guarantees, discounted landlord buyouts, permitted sub-leases, and other mitigating actions, and, in any event, the satisfaction of these lease commitments would not have a material effect on the Company's financial condition. The remaining lease terms are between approximately 5 and 18 years.
Tom Casey, Global Crossing CEO, continues as a member of the board of directors of Exodus.
About Global Crossing:
Global Crossing Ltd. (NYSE:GX) provides telecommunications solutions over the an integrated global IP-based network, which reaches 27 countries and more than 200 major cities. For more information, visit www.globalcrossing.com or www.asiaglobalcrossing.com.