|January 29, 2002|
In Another Big Bankruptcy, a Fiber Optic Venture Fails
By SIMON ROMERO
Global Crossing Ltd. (news/quote), which spent five years and $15 billion to build a worldwide network of high-speed Internet and telephone lines, filed for bankruptcy protection yesterday, unable to find enough customers to make its network profitable.
The company had attracted many notable business and political figures as investors, including Terry McAuliffe, chairman of the Democratic National Committee, who profited by selling Global Crossing stock before it declined.
Another early investor was former President George Bush, who accepted stock in lieu of an $80,000 fee for speaking to Global Crossing customers in Tokyo in 1999, although it is not known whether Mr. Bush sold his stock. Other investors included the Tisch family of New York and Lodwrick Cook, the retired chairman of ARCO and a big Republican Party fund-raiser.
If the bankruptcy plan is accepted, Global Crossing's chairman, Gary Winnick, will lose control of the company. But the blow has been softened for Mr. Winnick by Global Crossing stock deals that have reaped him more than $730 million. Mr. Winnick, a former associate of Michael R. Milken, founded the company in Beverly Hills, Calif., in 1997.
Others have not fared as well. Global Crossing shares have fallen more than 99 percent, to 13.5 cents, in over-the-counter trading yesterday after being delisted by the New York Stock Exchange; as recently as March 2000, they traded for more than $60. Since that high point, more than $40 billion of the company's market value has evaporated.
"I don't know how the management of this company did so well while small shareholders did so poorly," said Linda Lorch, a primary- school teacher in Scarsdale, N.Y., who said she lost more than $120,000 on Global Crossing stock.