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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: Teddy who wrote (2119)	9/25/1999 10:07:00 AM
From: Blackmarlin	Respond to of 15615

From BusinessWire... <<Fitch IBCA Rates Global Crossing & Lowers Frontier Corp NEW YORK--(BUSINESS WIRE)--Sept. 24, 1999--Fitch IBCA initiates rating coverage on Global Crossing Holdings Ltd. (Global Crossing) assigning a `BB+' senior unsecured debt rating. Fitch IBCA concurrently downgrades Frontier Corp. (Frontier) to a `BB+' senior unsecured debt rating, `BB+/BB' senior/subordinated debt shelf rating and `F-S' commercial paper rating from an `A' senior unsecured debt rating, `A/A-' senior/subordinated debt shelf rating, and `F1' commercial paper rating. Fitch IBCA also downgrades Frontier Telephone of Rochester Inc. (FTR) to `BBB+' senior unsecured debt rating from `AA-' senior unsecured debt rating and FTR's commercial paper rating to `F2' from `F1+'. The rating actions reflect the anticipated third quarter 1999 closing of Global Crossing's acquisition of Frontier. In March 1999, Global Crossing and Frontier Corp. announced they had signed a merger agreement in a stock-for-stock transaction. Subsequent to the merger agreement, Global Crossing's share value declined below the "collar" contained in the original merger agreement. In order to eliminate uncertainty regarding completion of the acquisition, Global Crossing raised its offer to 2.05 of Global Crossing's shares for each of Frontier's shares which represented an increase from the 1.8 of Global Crossing's shares under the original terms. The new proposal also includes a six-month stock repurchase program of approximately $500 million. The new offer currently has a transaction value of approximately $10 billion. Pro forma for the Global Crossing-Frontier merger and the acquisition of Global Marine completed in July 1999, revenues and earnings before interest, depreciation, amortization and non-recurring charges (EBITDA) for the six months ended June 30, 1999, were approximately $1.9 billion and $433 million, respectively. Total debt on a pro forma basis was approximately $3.8 billion at June 30, 1999. Total leverage pro forma for the merger and the Global Marine acquisition was approximately 4.3x and interest coverage was 4.0x at June 30, 1999. Frontier's U.S. fiber optic network combined with Global Crossing's international fiber optic network will create a global IP network with over 88,1000 route miles connecting 24 countries. Global Crossing's and Frontier's ratings also reflect the merged company's technologically advanced network and anticipates a continuation of the robust growth rates for data and Internet traffic. The rating also acknowledges the highly competitive nature of the telecommunications market, the developmental stage of much of the company's network, high future capital expenditures and the impact of future acquisitions and stock repurchases. Fitch IBCA also expects continued growth in the supply of undersea cable which will exert negative pricing pressure. The rating for FTR is assessed separately from its parent due to legal restrictions imposed by the New York Public Services Commission (NYPSC) regarding the financial, operational and managerial activities between FTR and Frontier. FTR is regulated under the 7-year Open Market Plan settlement agreement which was approved by the NYPSC in January 1995. The Open Market Plan currently restricts FTR from making dividend payments to its parent company and imposes service level requirements unto FTR. Though the plan is currently in its fifth year, the rating acknowledges that the highly regulated nature of FTR's operations is unlikely to change significantly upon expiration of the plan. The rating also reflects FTR's low leverage and ability to self- fund operations. For the last 12 months (LTM) ended 6/30/99, the company generated revenues and EBITDA of approximately $342 million and $150 million, respectively. At June 30, 1999, FTR had nominal total leverage of 0.3x. Interest coverage for LTM June 30, 1999, was approximately 146.2x. Frontier Corporation is a U.S. facilities-based Internet protocol applications and telecommunications company that provides local, competitive local exchange carrier, long distance, data and Internet, and to a lesser extent, wireless communication services. Frontier Telephone of Rochester Inc. is the largest operating subsidiary within the Local Communications Services division at Frontier.>>

To: Teddy who wrote (2119)	9/25/1999 1:16:00 PM
From: Frank A. Coluccio	Read Replies (3) \| Respond to of 15615

Teddy, I think that it would depend on how finely Global could dissect and select the parts it wants. It needs to keep itself (even if only appearing) to be in a pristine class of the next gen photonic movement. Picking up copper, switches and poles of USW would have egregiously contaminated this elevated state of being, call it image, which is all important to their various psychological presences - both operationally and marketwise. I felt this way, marginally, at first, about FRO, until I explored their Global Center operations and their unfolding POP plans, which actually stunned me - causing me to retract some of my earlier misgivings and statements which I made here, for lack of prior knowledge... even if I do have some misgivings about them dabbling in email and other office automation services, at this time. The mission of GBLX should be on a higher plane than those of the incumbents. There is nothing but room for enormous growth on the higher plane, while legacy-entrenched players are highly vulnerable to the same pitfalls which plague all of those who suffer from old age. If GBLX ever finds itself in a position where they must re-synthesize the underpinnings of the past, they will stumble hard. I trust that they will stay above the line, despite their earlier misguided courtship. Regards, Frank Coluccio