[Investors Flock To IPO From Telecom-Network Firm Global Crossing]
GBLX thread at SI: Subject 22493
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NEW YORK -(Dow Jones)- Investors, hoping to cash in on another hot initial public offering, Friday snapped up shares of Global Crossing Ltd., an ambitious provider of undersea fiber-optic telecommunications systems.
The big IPO of 21 million shares was priced late Thursday at $19, at the high end of estimates. Price talk was between $17 and $19 a share. In active midmorning trading, shares of Global Crossing (GBLX) were at $24.375, a 28% premium to the offer price. Volume surpassed seven million shares.
Global Crossing, founded last year with headquarters in Beverly Hills, Calif., and in Bermuda, is developing four major subsea cable systems that will cost a total of about $3 billion to complete. The first system, linking the U.S., Britain, Germany and the Netherlands, recently began operations. The firm raised $800 million in June by selling high-yield bonds to major institutions and mutual funds in preparation for the IPO.
Global Crossing made headlines a few months ago when it recruited Jack Scanlon, then a senior Motorola Inc. executive, to become chief executive officer. Scanlon, who has broad experience in the telecom sector, left an influential post held since late 1996 as president and general manager of Motorola's cellular networks and space business. Scanlon said he jumped ship for "a chance to be a CEO" and "a chance to build a global telecom company."
Global Crossing investors include Canadian Imperial Bank of Commerce and the powerful Tisch family. The lead backer is investment bank Pacific Capital Group, founded and run by Gary Winnick, co-chairman of Global Crossing. Lodwrick Cook, a co-chairman, is a retired chairman and CEO of Atlantic Richfield Co.
Cook recently asked friend and former President George Bush to help unveil the company's plans for an undersea link between Japan and the U.S. Winnick runs an investment company he founded after leaving Drexel Burnham in the mid-1980s.
Global Crossing plans to operate as a so-called carrier's carrier - a wholesaler of telecom service - and expects to capitalize on the ever-growing demand for Internet connections. There are no projections yet on when the company could be profitable, but with a high-capacity network that would total about 32,000 miles when completed around 2000 and a strategy to serve Internet-service providers and telecom companies, the company's potential is huge, according to analysts.
The company faces competition from existing satellite providers and other undersea cable operators, including WorldCom Inc. and another system by a consortium of 14 large cable and telecom companies, including MCI Communications Corp., AT&T Corp. and Sprint Corp. |
