Global Crossing Ltd. (NYSE: GX) and Asia Global Crossing (NYSE:AX), which is approximately 59 percent owned by Global Crossing, announced the companies are in preliminary discussions to merge. The companies cited continuing consolidation in the telecommunications industry and the evolving needs of their global customers as motivation for their decision.
Global Crossing also announced reorganization of its senior management to flatten organization structure and foster stronger global customer focus, including several new appointments. Together, Global Crossing Ltd. and Asia Global Crossing announced changes in leadership, including the appointment of John Legere, currently president and chief executive officer of Asia Global Crossing, who will also assume the chief executive officer position at Global Crossing effective immediately.
Gary Winnick, Chairman of both Global Crossing and Asia Global Crossing, stated that in addition to strategic benefits, a combination would result in cost savings, operational efficiencies and enhancement of product-service integration. "The global telecommunications industry is in a period of rapid transition. Competition is more intense. Customers are more demanding. But opportunity has never been greater."
The management of both companies supports the concept of a merger. However, the form of a potential transaction is still to be determined and is subject to board, shareholder, and regulatory approvals.
Separately, Global Crossing said it expects its financial performance to be substantially below current analyst expectations for the third quarter ended September 30, 2001, due primarily to a sharp falloff in wholesale sales of indefeasible rights of use (IRUs) to carrier customers. The company said it expects cash revenue in the quarter to be approximately $1.2 billion and recurring adjusted EBITDA is expected to be significantly less than $100 million. Global Crossing said it expects recurring service revenues to enterprise customers to be close to expectations at levels slightly below the prior quarter.
Asia Global Crossing reaffirms current guidance for proportionate cash revenue of $80 to $120 million and proportionate adjusted EBITDA of $10 to $30 million in the third quarter ended September 30, 2001.
As Global Crossing increases its focus on providing managed network services to global enterprises it intends to divest its Global Marine Systems and IPC divisions. With the construction of Global Crossing's global network now essentially completed, Global Crossing said that the important role played by Global Marine Systems in its corporate strategy is now declining and it believes it will be able to provide adequately for continued maintenance by Global Marine through contractual arrangements with the selected buyer.
About Global Crossing:
Global Crossing Ltd. (NYSE:GX) provides telecommunications solutions over an integrated global IP-based network, providing managed data and voice products and services. For more information, visit www.globalcrossing.com.
About Asia Global Crossing:
Asia Global Crossing (NYSE: AX), a public company whose largest shareholders include Global Crossing (NYSE: GX), Softbank (Tokyo Stock Exchange: 9984), and Microsoft (Nasdaq: MSFT), provides the Asia Pacific region with integrated telecommunications and IP services. Through a combination of undersea cables, terrestrial networks, city fiber rings and complex web hosting data centers, Asia Global Crossing is building a pan-Asian network, which, in combination with the worldwide Global Crossing Network, will provide the Asia Pacific region with seamless access to major business centers worldwide. visit www.asiaglobalcrossing.com.