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Global Discloses Decline in Cash

Telecom: Court filing is important to company's creditors, who are owed more than $12 billion.

April 10, 2002|JAMES S. GRANELLI | TIMES STAFF WRITER

Global Crossing Ltd. lost $152 million in the first month after it filed the nation's fourth-largest bankruptcy, and the fiber-optic network operator's cash position grew weaker than executives had stated last month, the company disclosed in a court filing Tuesday.

Global Crossing's available cash at the end of February was $624 million, according to the Bankruptcy Court report. The amount is $24 million more than the cash on hand at its Jan. 28 filing, but much less than the $700 million of unrestricted cash that executives had touted in late February.

Executives would not comment Tuesday on the first detailed, though unaudited, financial statement the Bermuda-based company has turned in since filing a Chapter 11 bankruptcy petition. The company is required to file monthly financial reports, but officials did not say when the report for March would be completed.

For creditors, the company's cash holdings are important because they will help determine how much money is available to fund a reorganization. Creditors are owed at least $12.4 billion.

FOR THE RECORD
Los Angeles Times Thursday April 11, 2002 Home Edition Main News Part A Page 2 A2 Desk 2 inches; 46 words Type of Material: Correction
Global Crossing--A story in Wednesday's Business section incorrectly stated that Global Crossing Ltd. had $2.2 billion in cash on hand, excluding restricted funds and cash at subsidiaries not in bankruptcy, at the end of September. The $2.2-billion figure actually included money at those subsidiaries and restricted funds.

The company is in talks with several suitors, but no proposal has surfaced, other than a shareholders' bid and a much-criticized deal with two Asian companies.

Global Crossing has been slashing costs, partly by firing workers, to halt the rate at which it has been spending its available cash. At the end of September, it had $2.2 billion in cash on hand, which did not include certain restricted amounts or the money at subsidiaries that didn't file for bankruptcy--primarily Asia Global Crossing Ltd., which had $434 million on hand at the end of February.

Asia Global, which is 59% owned by Global Crossing, is talking with 19 separate investors in its own effort to get out from under its parent company, which reneged late last fall on a promise to provide the unit with $400 million in financing. Executives at the Beverly Hills-based subsidiary have insisted that the unit can find the money elsewhere and survive without Global Crossing.

On a consolidated basis, Global Crossing has $1.1 billion in cash on hand.

The one-month financial snapshot shows that non-bankrupt subsidiaries such as Asia Global are hurting as badly as Global Crossing and its 54 units that are in bankruptcy.

Global and those units managed to bring in $226 million in revenue through February. Expenses, primarily access to and maintenance of its cable network, left the company with a loss of $78 million. The expenses included $11 million in legal, accounting, investment banking and other professional fees for companies hired in February to help the company reorganize.

Asia Global and other units not in bankruptcy brought in $73 million in revenue and lost $83 million. After certain sales and expense adjustments that applied to the whole company, consolidated sales were $269 million; the net loss was $152million.

Global Crossing has yet to file its 2001 fourth-quarter or full-year financial results, citing ongoing investigations of the company's accounting and financial reporting practices. A former executive has alleged that Global swapped capacity on its lines with that of other fiber-optic network operators and improperly reported it, effectively boosting revenue artificially.

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