Asia Global Crossing declares bankruptcy, agrees to sale

Hong Kong-based Asia Global Crossing has come to an agreement to declare Chapter 11 bankruptcy and sell essentially all its operations and assets to a newly formed company.

Asia Netcom, which was recently organized by China Netcom and is expected to include investments from Newbridge Capital and Softbank Asia Infrastructure Fund, has agreed to purchase the company out of bankruptcy for an undisclosed amount. Asia Global Crossing’s operations will continue during the reorganization, and its management team and employees will remain in place.

While the deal requires approval from the U.S. Bankruptcy Court and will likely have to withstand an auction process, the proposal already has some important backers. According to the announcement of the planned sale, Asia Global Crossing’s principal vendors have agreed to restructure the obligations owed to them, which the new company has agreed to take up, as well as the customer contracts and operating liabilities of Asia Global Crossing.

After the completion of the transaction, the companies expect $80 million will be left to repay creditors and settle debt associated with the bankruptcy proceedings. Current Asia Global Crossing equity will be wiped out under the deal. After the closing of the deal, which is expected in Q1 2003, the company Asia Netcom will be funded by $120 million provided by its investors as well as additional bank financing.

Asia Global Crossing representatives did not return calls requesting comment.