XO launches tender for Global Crossing bank debt at higher price

By Paul Deckelman

New York, June 24 - XO Communications, Inc. launched its previously announced tender offer for Global Crossing Ltd.'s $2.25 billion of senior secured bank debt at a slightly higher price than previously.

The Reston, Va.-based telecommunications company controlled by billionaire financier Carl Icahn, said it will buy Global Crossing's bank debt at $220 per $1,000, up from $210 per $1,000 first announced. In total, the offer is worth $495 million.

XO said it has sent definitive tender documents to the administrative agent for that bank debt and its counsel, for distribution to the bank debt holders.

The tender offer will expire on June 27, subject to possible extension.

XO's tender offer is not subject to due diligence or financing. The only condition to XO's tender offer is that the administrative agent for the senior secured lenders does not withdraw or amend their objection to Global Crossing management's efforts to close a deal with a rival would-be acquirer, Singapore Technologies Telemedia Pte Ltd. by July 7.

Global Crossing had previously agreed to a plan under which ST Telemedia would purchase a 61.5% stake in a reorganized Global Crossing for $250 million. After objections were raised to the purchase of the Bermuda-based global telecommunications carrier on national security grounds - any acquisition would require U.S. government approval - Icahn stepped forward with his own offer of more than $700 million to buy the company.

Global Crossing, which favores the ST Telemedia plan, says that it still has the exclusive rights to propose a reorganization plan and proposed extending that exclusivity until Oct. 14, along with its purchase agreement with ST Telemedia, while Global Crossing's lenders contend that telecom firms' purchase agreement, as currently structured, says that Global Crossing and ST Telemedia had been free to terminate the proposed transaction at will any time after April 30; they objected to the efforts to keep the purchase agreement with ST Telemedia in effect and to extend management's reorganization plan exclusivity to October.

XO said it will close the tender offer regardless of the U.S. Bankruptcy Court for the Southern District of New York's ruling on the administrative agent's objection.

Prior to the expiration of the tender offer on June 27, XO will have a minimum of $250 million in escrow at a money center bank to guarantee payment for properly tendered bank debt. If additional capital is required to close the tender, XO said it will place such additional capital into escrow on June 30.

XO said: "Even if and when the ST Telemedia transaction is finally approved, bank debt holders will ultimately receive approximately 23 cents in cash and other securities, as opposed to the certainty of 22 cents cash today. In light of the timing and uncertainties inherent in the STT transaction, XO's offer is far superior."

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