Hutch buys out Asia Global Crossing stakes


Hutchison Whampoa is controlled by Hong Kong billionaire Li Ka-shing

By Geoff Hiscock
CNN Asia Business Editor

HONG KONG, China (CNN) -- Hong Kong conglomerate Hutchison Whampoa will pay $120 million to buy Asia Global Crossing out of three communications joint ventures in Hong Kong.

Hutchison, controlled by Hong Kong billionaire Li Ka-shing, said late Monday the acquisitions would be made through its wholly owned subsidiary Hutchison Telecommunications Ltd.

The deal will help Asia Global Crossing push ahead with its financial restructuring, acting chief executive Jack Scanlon said.

Asia Global Crossing is held 58.9 percent by troubled U.S. parent Global Crossing, which filed for Chapter 11 bankruptcy protection in January. Its other key shareholders are Microsoft and Japanese Internet investor Softbank, with about 15 percent each.

"We expect the $120 million will extend our runway well into 2003," Scanlon said.

Joint $750M bid


Asia Global Crossing is completing a fiber-optic network to link Hong Kong and other key Asian business centers

After Global Crossing fell into trouble, Hutchison Whampoa and Singapore Technologies Telemedia said they would bid $750 million to buy the rest of the U.S. fiber-optic network company that they do not already own.

Other bidders are also thought to be interested, with Asia Global Crossing widely regarded as the best asset Global Crossing has.

Hutchison Whampoa said that under the deal announced in Hong Kong Monday, Hutchison Telecom would take over Asia Global Crossing's half shares in Hutchison Global Crossing and Hutchison Global Center, and its 42.5 percent interest in ESD Services.

Hutchison Whampoa group managing director Canning Fok said there would be no change to operations of the three companies.

Shares in Hutchison were up 25 cents or 0.37 percent to HK$67.75 in Tuesday afternoon trade.

Cable network

Asia Global Crossing, which says its aim is to be the leading telecommunications infrastructure and services provider among major Asian business centers, has almost completed its fiber-optic cable network.

This asset, known as the East Asia Crossing, has drawn plenty of attention from potential buyers.

Earlier this month Asia Global Crossing confirmed it has signed nondisclosure deals with 19 parties, normally a sign a company is opening its books to buyers or investors. But it also cautions that the process is in the early stages.

Of the 19 initial bidders, nine are regarded as serious contenders.