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Asia Global Delays Some Note Payments

October 16, 2002|Elizabeth Douglass | Times Staff Writer

Moving to preserve cash while it tries to raise additional funds, Asia Global Crossing Ltd. said Tuesday that it is delaying interest payments on its senior notes and renegotiating payment terms with two of its contractors.

The Bermuda-based subsidiary of Global Crossing Ltd. has been in talks for months with potential buyers, but a bankruptcy filing still is a possibility -- either as a last-ditch survival move or as part of a turnaround package with new investors.

As part of a multifaceted announcement, Asia Global also released preliminary cash balance and revenue figures for the second and third quarters, and said it hired PricewaterhouseCoopers to replace longtime auditor Arthur Andersen.

Since the beginning of the year, Asia Global has not been able to certify its financial results because of ongoing investigations of its booking of fiber-optic capacity deals involving Asia Global, Global Crossing and other carriers.

Global Crossing, which owns almost 59% of Asia Global, is in Bankruptcy Court and faces allegations that the company used sham capacity deals to boost its earnings. Some of those deals involve Asia Global, which operates a transoceanic network serving Singapore, Hong Kong and other major locales in the Pacific.

Asia Global has been working to distance itself from its parent company by seeking separate backers, restructuring its board and recalculating revenue to exclude reciprocal capacity deals -- a move Global Crossing has not yet taken. Gary Winnick, founder of both companies, recently resigned from Asia Global's board.

The firm said it booked $32.1 million in sales for the third quarter, up from $27.8 million the previous quarter. Asia Global's available cash balance stands at $250.1 million, down from $253.5 million Sept. 30.

Asia Global said the figures have not been reviewed by its new auditor, and are not comparable to previous years.

The company also said its revenue figures do not include proceeds from reciprocal sales or revenue owed it by Global Crossing.

For the second time this year, Asia Global will take 30 additional days before making its scheduled interest payment on $408 million in senior notes.

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