Nov. 13, 2001 -- Weighed down by a huge loss on its stake in the bankrupt Exodus Communications, network services giant Global Crossing reported a $3.4 billion loss last night, saying it will cut 1,200 more jobs and has begun talks with creditors to amend loan covenants.
In releasing its third quarter earnings, the Hamilton, Bermuda-based company said it would take a $2 billion charge to completely write off the value of its 108 million shares in Exodus, which filed for bankruptcy Sept. 27.
Global Crossing received the shares in an all-stock deal to sell its Global Center web hosting unit to Exodus in Sept., 2000. On Monday, Exodus announced that its common stock would be worthless in any resolution of its Chapter 11 case.
Global Crossing said it would make spending cuts, eliminating 1,2000 jobs - primarily from management - and also targeting "excessive support services and operating costs." These cuts come on top of a layoff of 2,000 workers announced on Aug. 1.
Global Crossing also said it anticipates it will have difficulty staying in compliance with some of its loan covenants.
"The company has entered into discussions with lenders under its senior loan facility for the purpose of modifying certain covenants in order to provide additional future operating flexibility," the company said in its release.
In a conference call Wednesday with analysts, Global Crossing CEO John Legere said the company "hope and expect to have (negotiations with bankers) completed in Q4."
"With our cash position, we plan to meet all our obligations and make all our interest payments," Legere added.
Global Crossing emphasized that it had $2.4 billion in cash available as of Sept. 30. For its continuing operations, the company reporting third quarter revenues of $999 million, and a net loss of $550 million, or $0.62 per share.
"Over the past several weeks, the Global Crossing management team has reviewed every aspect of our business, from capital and operating expenses to our corporate culture, and to establish a position as one of the world's leading telecommunications service providers, we have defined an initial `inter-city' focus as part of an integrated strategy and business plan," Legere said in a statement Tuesday.
Legere took the helm of Global Crossing last month, coming from a leadership position at Asia Global Crossing, a publicly-held subsidiary that ocuses on the Asia-Pacific market. Upon his arrival, the company said it was examining a merger with Asia Global Crossing.
Those talks soon were discontinued, and yesterday Reuters reported that bondholders in Asia Global Crossing urged the company to draw down a $400 million loan, citing concerns about the "rapidly deteriorating financial position of (Global Crossing)."
Speaking with analysts, Legere said that Global Crossing would honor its commitment to make those funds available if Asia Global Crossing requests it.
Global Crossing Ltd provides integrated telecommunications solutions over an integrated global Internet Protocol (IP)-based fiber-optic network At year-end 2000, the network was 85% complete, and included 1.7 million fiber miles, 249 points of presence in 25 countries and metropolitan networks in 19 major cities.