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

To: Howard C. who wrote (2690)	10/15/1999 3:10:00 PM
From: AurumRabosa	Read Replies (1) \| Respond to of 15615

D&P may downgrade Global Crossing rating (Press release provided by Duff & Phelps Credit Rating Co.) Chicago (October 15, 1999) - Duff & Phelps Credit Rating Co. (DCR) has placed the BBB (Triple-B) senior secured, BBB- (Triple-B-Minus) senior unsecured and BB+ (Double-B-Plus) preferred stock ratings of Global Crossing Holdings Ltd. (Global Crossing) on Rating Watch-- Down. This rating action reflects the company's announcement that it would acquire RACAL Telecom (RACAL), a subsidiary of RACAL Electronics PLC, for $1.65 billion in cash. Likewise, DCR placed the BBB- (Triple-B-Minus) senior unsecured rating of Frontier Corp (Frontier) on Rating Watch--Down. The Frontier rating action reflects the cross guarantees that exist between itself and Global Crossing as a result of their merger on September 28, 1999. The ratings of Frontier Telephone of Rochester (FTR) are unaffected by Global Crossings acquisition because of its independent and stand-alone nature with respect to both Frontier and Global Crossing. FTR has significant regulatory restrictions, operates under its own board of directors and receives no vital operating services or synergies from its parent company. Therefore, the company is viewed as a stand-alone credit. The Global Crossing and Frontier rating watch will be resolved as the pro forma corporate structure and financials for the RACAL acquisition are analyzed. While the majority of the funds for the RACAL acquisition will be non-recourse to Global Crossing there exists a material degree of implicit support that must be considered with this credit. In addition, Global Crossing will fund $500 million of the acquisition directly from Global Crossing Holdings. Should the pro forma Global Crossing corporate structure place RACAL in a separate holding company or directly linked to Global Crossing Ltd, this will minimize the credit impact of this acquisition. Global Crossing expects to achieve approximately $420 million of revenue and cost synergies associated with this acquisition by 2001. RACAL expects to achieve approximately $320 million in revenues in 1999. RACAL will provide Global Crossing with direct end-user access through its modern fiber-optic network in the UK. The RACAL network will also be interconnected with Global Crossings Atlantic Crossing One (AC-1) undersea cable. The addition of RACALs EBITDA to Frontiers local and integrated services cash flow provides Global Crossing with greater financial stability and diversity to the normal financial variability associated with the sub-sea transport business. Global Crossing is building an extensive global fiber-optic network that consists of submarine and over- land cable facilities. The network is expected to span four continents and address 80 percent of the worlds traffic transmission needs. Through its Frontier acquisition, Global Crossing also provides local services, nationwide long distance and Internet services in the United States. biz.yahoo.com