Global Crossing expects larger after-tax loss on ILEC sale

Global Crossing said in a Securities and Exchange Commission filing yesterday that it expects to take a $208 million loss from the sale of its incumbent local exchange carrier (ILEC) business to Citizens Communications completed last month. The anticipated loss is $78 million more than previous estimates.

However, a company spokeswoman indicated that such post-closing adjustments are common and that the amount of this particular adjustment is in line with the size of the transaction. Global Crossing sold the business, which included about 1.1 million telephone access lines, for $3.5 billion in cash and received just over $3 billion in cash after taxes.

“This is not much of a story,” said the spokeswoman. “You’ll find these types of adjustments, which include such items as the allocation of inventory and accrued bonuses, in just about every deal. This is very common stuff.”

Global Crossing sold the ILEC business to concentrate on its core fiber-optic transport business and to generate the revenue it needed to complete the funding of its business plan, said CEO Tom Casey when the sale was first announced in late April. Casey said the revenue would be used to reduce the company’s indebtedness and to invest in “network and product capabilities.”