Hong Kong, November 18, 2002 --A group led by China Netcom said on Monday it will acquire East Asia Crossing (EAC) and other network assets from Asia Global Crossing Ltd. This is the first time for a Chinese company to purchase foreign telecom company.
As reported, it costed Asia Global Crossing $1.3 billion to build the East Asia Crossing submarine cable system, which was completed on August. 26 2002.
Under the $270 million deal, the Netcom-led group will provide $150 million in new loans and $120 million in fresh equity to Asia Global Crossing, 59-percent owned by bankrupt U.S. telecom Global Crossing Ltd.
China Netcom, founded by Beijing entrepreneur Edward Tian, is China's No. 2 provider of fixed-line phone services. Its shareholders include media group News Corp. and U.S. investment bank Goldman Sachs. Last year, China Netcom acquired some of the northern network assets of China Telecom as part of a break-up plan to ready the Chinese telecommunications industry for the post-World Trade Organization business era.
In a statement in Hong Kong Monday, Tian said the deal "allows the consortium to build market leadership at a very reasonable cost."
The new company will be known as Asia Netcom.
The deal, which is subject to court and regulatory approval, is expected to be completed in the first quarter of 2003.
Asia Global Crossing said the group's other members are likely to include U.S.-based investment firm Newbridge Capital and private Japanese equity fund Softbank Asia Infrastructure Fund.
It said there was no expected return for Asia Global Crossing's shareholders. Apart from Global Crossing, they include Softbank Corp. and Microsoft.
As part of the reorganization, Asia Global Crossing said some of its units also filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court of the Southern District of New York.
Bermuda-based Global Crossing unveiled its own rescue plan a few months ago, filing for U.S. bankruptcy.
On August 9 it announced an agreement under which Hong Kong-based Hutchison Telecommunications Ltd., a unit of Hutchison Whampoa Ltd., and Singapore Technologies Telemedia Pte. Ltd. (ST Telemedia) will invest a total of $250 million for a 61.5 percent majority interest in a newly constituted Global Crossing on its emergence from bankruptcy.
Global Crossing's creditor groups supported the agreement, which was approved by its U.S. bankruptcy court.
If creditors approve a reorganization plan next month and it is confirmed by the court, Global Crossing is expected to emerge from Chapter 11 protection in early 2003.