The former high-flying telecommunications network builder sought bankruptcy protection on Monday.
"This is a complete disaster," said Pat Comack, a telecommunications analyst with Guzman & Co., a Miami investment bank. "I thought they had a chance."
Global Crossing's insolvency is the fourth largest public company bankruptcy, in terms of assets, in U.S. history, according to tracking firm BankruptcyData.com.
According to its filing in U.S. bankruptcy court, Global Crossing counted $22.4 billion in assets. By comparison, the assets of retailer Kmart, which declared bankruptcy last week, stood just over $16.3 billion.
The New York Stock Exchange immediately halted trading in the shares of the Bermuda-based company, which spent billions building a worldwide fiber-optic network only to see bandwidth demand wither.
As the dot-com bubble lost air, investors dumped holdings in Global Crossing, deciding it was over-indebted. Now, shareholders could be left with worthless stock.
The NYSE said it would apply to the U.S. Securities and Exchange Commission to delist the company's stock,
Global Crossing announced on Monday a $750 million investment by Hong Kong-based holding company Hutchison Whampoa and telecom provider Singapore Technologies Telemedia, intended to pump life into the faltering company as it seeks court protection from creditors who are owed some $12.4 billion.
The investment, which hinges on court approval of the bankruptcy reorganization by September, would give the two Asian partners a majority stake in Global Crossing.
The terms of Global Crossing's proposed reorganization would leave current shareholders holding worthless stock.
"They're sacrificing their shareholders to satisfy the need to reduce debt, so they can continue to operate," said Berge Ayvazian, a telecom industry analyst with the Yankee Group.
The company said it would continue to sell voice and data services over its network during the restructuring period. Employees will receive pay and benefits without interruption.
"With this restructuring, we'll put financial uncertainty behind us," said CEO John Legere.
In recent months, Global Crossing which owns a massive undersea fiber-optic network connecting 220 cities in 27 countries
has slashed more than a quarter of its work force, as it reported third-quarter 2001 losses of $3.84 per share.
Most employees cut last year were involved in laying the company's fiber-optic network, which has since been completed, an official said.
Global Crossing, which has some 8,000 employees, said it has no plans for further job cuts.
The company's debt stems mainly from the construction of its network but also from acquisition of five other telecommunications-related firms in 1999 and 2000.
"They had a business plan that was premised on being able to generate high revenues very rapidly" to pay back debts, Ayvazian said of Global Crossing, which was launched in 1997 and had its initial public stock offering in August of the following year.
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