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Over the objections of equity stakeholders and other groups hoping to challenge a $750 million bid for Global Crossing Ltd., a federal judge on March 25 let stand a revised offer from the bankrupt telecom’s Asian partners. The motion, approved by Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York, also set the procedures for considering alternate bids for Global Crossing and reduced the breakup fee to $30 million from $40 million. Under the proposed plan, Global Crossing would sell, through preferred shares, 79 percent of a reorganized company to Hutchison Whampoa Ltd. and Singapore Technologies Telemedia Ltd., Global Crossing’s Asian partners, for $750 million. A creditors’ committee and a group of banks, including FleetBoston Financial Corp., had objected to the $40 million breakup fee payable by Global Crossing in the event a deal with Hutch-STT wasn’t reached. Equity stakeholders, represented by KAB Group, had asked to be labeled a “qualified investor,” exempt from the bidding procedures laid down by the Blackstone Group, Global Crossing’s restructuring advisors. KAB is hoping to re-establish the global broadband provider in three years by offering $5.5 billion in new warrants. “To walk through the process with the Blackstone Group would be biased” against investors who have lost $10 billion in equity investment, argued Everett Hopkins, an attorney with Hopkins, Lawrence & Bailey, representing KAB. “No one is more sensitive than I to the losses the stakeholders have suffered,” the judge responded. “The name of this game is two things,” Gerber said from the bench — maximizing stakeholder value and ensuring the bidding process is fair and occurs on a level playing field. It would be unfair, Gerber said, to give a court blessing to special procedures for one group of creditors. Lawyers representing Global Crossing’s senior secured lenders said they had no objection to the modified procedures as long as the bids were not below the original Hutch-STT amount. If the court accepts the Jan. 28 Hutch-STT proposal, creditors will receive about 4 cents on the dollar and common shareholders will be completely wiped out. The deadline for competing bids is June 20. The auction is scheduled for July 8. Paul Basta, a Global Crossing attorney from Weil, Gotshal & Manges, said the procedures were designed to get a fair bid for the company as well as ensure the offers were adequately funded. Copyright (c)2002 TDD, LLC. All rights reserved.

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