SINGAPORE, May 1 (UPI) -- Singapore Technologies Telemedia said late Wednesday it would increase its planned investment in bankrupt telecom company Global Crossing. The decision comes after Hutchison Whampoa pulled out of the deal due to regulatory resistance.
ST Telemedia will increase its original investment to $250 million from a planned $125 million to buy a 61.5 percent interest in the reorganized Global Crossing, the companies said in a statement.
If approved, the deal is expected to help Global Crossing emerge from Chapter 11 within the next few months.
"We are enthusiastic about Global Crossing's future," said Lee Theng Kiat, president and chief executive officer of ST Telemedia. "This transaction will help ensure that the company and its employees continue to provide world class telecommunications service to customers around the world."
The agreement, which was approved by the United States Bankruptcy Court for the Southern District of New York on Aug. 9, 2002, allowed either investor to assume a majority stake if the other company withdrawals.
Hong Kong conglomerate Hutchison, whose businesses range from ports to hotels, decided to walk away, saying it had not been possible "to reach agreement on an appropriate structure that is fully satisfactory to all parties concerned within a reasonable investment time frame."
The acquisition of Global Crossing has been under close scrutiny from the Committee on Foreign Investment in the United States, which is believed to have shown concerns about the ties between Hutchinson and China. This, despite an offer from the Hong Kong company to take a limited management role, acting instead through U.S.-approved proxies.
U.S. law restricts the purchase of a local telecommunications company by a company that is owned or controlled by a foreign government.
So the presence of ST Telemedia alone could also raise some objection. The company is a subsidiary of the Singapore Technologies Group, a unit of Temasek Holdings, the investment arm of the Singapore government.
ST Telemedia is a major shareholder in Singapore's second largest telecommunications company, StarHub, as well as Indonesia's second largest telecommunications operator, PT Indosat, which it recently acquired, and Equinix, a company providing Internet exchange and infrastructure services across the United States and Asia-Pacific.
Wednesday's decision taken by ST Telemedia and Hutchison will not change distributions to creditors under Global Crossing's Chapter 11 Plan of Reorganization, which was accepted by creditors and confirmed by the Bankruptcy Court in December 2002, the statement said.
"ST Telemedia will be an ideal partner for us and will bolster Global Crossing's position as a leading provider of next generation telecommunication services on a global scale," said John Legere, Global Crossing's CEO. "As an innovative information and communications company having both financial strength and an aggressive growth plan, ST Telemedia clearly stands out as an investor that is complementary to Global Crossing's vision and mission."
Global Crossing, the operator of a high-speed fiber-optic network in 27 countries, filed Chapter 11 on January 28, 2002, saddled with debt of $12.4 billion which it had accumulated to install fiber-optic lines connecting American cities to the rest of the world.