GLOBAL CROSSING FILES FOR BANKRUPTCY

Jan. 29, 2002 – Telecommunications giant Global Crossing, which uses St. Croix as a hub for portions of its undersea cable network, filed for bankruptcy on Monday.
The company said its worldwide operations would be unaffected by the filing and customers would not experience any changes in service. Employees will continue to be paid wages and other benefits without interruption, according to Reuters News Service.
Global Crossing struggled with the debt incurred from building its global network, which links more than 200 major cities in 27 countries. St. Croix is home to two new Global Crossing buildings that are used as a hub to land undersea fiber-optic cable and to house switching equipment.
Under a permit granted in 1999, Global Crossing pays the V.I. government $35,000 a year for each of its eight cables. The payments come in $1.4 million installments every five years, for a total of $7 million over the 25-year contract.
Early investors in Global Crossing reaped millions in stock sales. After the company got off the ground in 1997, it laid cables linking America, Europe and Asia to create a network that now connects hundreds of cities in 27 countries on four continents.
The network was built to accommodate what the telecommunications industry predicted would be a huge jump in the demand for high-speed data capacity, or broadband. However, although the traffic is increasing, demand has yet to reach the levels once predicted. Much of the existing undersea capacity is not being used, according to industry analysts.
Along with lack of demand, Global Crossing has suffered from declining prices for bandwidth capacity.
In the telecommunications industry, Global Crossing is called a "carrier’s carrier," meaning it constructs infrastructure and then sells bandwidth to licensed telecommunications companies.
Hutchison Whampoa Ltd. and Singapore Technologies Telemedia Pte., which already have business relationships with Global Crossing, have agreed to pay $750 million in cash to take control of the company. The two investors have ties with Global Crossing's Asian unit, Asia Global Crossing Ltd., through investments in a service provider and network in Asia.
Global Crossing's collapse despite $22.4 billion in assets is the fourth-largest bankruptcy in history, according to BankruptcyData.com — bigger even than Kmart Corp., which had $16.3 billion in assets when it filed for protection last week.