Hutchison Whampoa has walked away from a proposed USD250 million joint bid to buy Global Crossing, after the US government announced an extended enquiry into the deal. The move leaves Hutchison’s former partner Singapore Technologies Telemedia as the sole buyer of the bankrupt network operator.
Global Crossing filed for bankruptcy in January 2002 with a massive USD12.4 billion worth of debt. Hutchison and ST Telemedia quickly emerged as white knights, drawing up plans to purchase a 61.5% stake in the troubled company. The acquisition was approved by the US bankruptcy court in December 2002, and the prospective purchasers subsequently applied for approval from the government. US politicians, raised concerns over the prospect of selling a company with extensive telecoms infrastructure in the US, and whose customers include the US government, to a Chinese company. To assuage fears, the pair then proposed a new deal structure which would have distanced themselves from Global Crossing’s management by appointing US-approved proxies. However, the Committee on Foreign Investment remained unconvinced, and opted to extend the review for 45 days. Should ST Telemedia opt to go ahead on its own, it too will have a number of hurdles to pass. As a unit of the Singapore government’s investment arm Temasek Holdings, ST Telemedia will need a waiver from the US government to complete the purchase.