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To: SSP who wrote (93683)	10/15/2001 10:33:11 AM
From: Jim Bishop	Read Replies (1) \| Respond to of 150070

GTLS KPNQwest may buy Global TeleSytems-sources (UPDATE: Adds detail, background) LONDON, Oct 15 (Reuters) - Pan-European data communications company KPNQwest is in talks to buy Global TeleSystems Inc (OTC BB:GTLS.OB - news), the heavily indebted owner of one of the largest fibre-optic networks in Europe, sources said on Monday. ADVERTISEMENT KPNQwest could strike a deal within the next week or two, two people familiar with the talks told Reuters. Officials at GTS declined to comment on the situation, while a spokesman at KPNQwest said the company had no major corporate statements to announce at the moment. GTS has been negotiating a debt-for-equity swap with holders of 1.65 billion euros ($1.50 billion) of bonds for months. It has missed interest payments and warned it may file for bankruptcy. Loss-making GTS fell by the wayside after it borrowed heavily to set up its fibre optic network. A slump in global equity markets caused it to call off the sale of its central European division, which was one of its key plans to cut group debt. Speculation of an imminent takeover deal has driven up GTS bonds in recent weeks. The company's 275 million euro 11 percent bond due December 2009 was bid one point higher on Monday, at 15 percent of face value. KPNQwest's 500 million euro 8.9 percent bond due February 2008 was up four points, at 54 percent at face value. The takeover talks with GTS come as former Dutch telecoms monopoly KPN said earlier this month it was looking to cut its stake in KPNQwest, which it set up with Qwest Communications (NYSE:Q - news) two years ago. Shares in KPNQwest were up 1.3 percent at 5.48 euros in late morning trade. The stock has underperformed the Dutch telecoms sector (^AEXSTC - news) by about 17 percent since the start of 2001. (Additional reporting by Alex Clelland, Sudip Kar-Gupta)