Global Crossing Trims Services to Swift
Global Crossing Ltd., which filed the fourth-largest bankruptcy in U.S. history, will lose a contract to provide $300 million of services to Swift, a group of global financial institutions.
The Bermuda-based data network operator will sign a new agreement in which it will no longer be the exclusive data-transport provider for Swift, a consortium of 7,000 banks that processes $6 trillion in transactions daily.
The banks withdrew from the five-year contract because of concerns over Global Crossing’s ability to meet obligations, the group’s chief executive said.
Global Crossing sought protection from creditors in January after piling up $12 billion in debt amid slumping network demand. Other customers might back out of agreements with the company, one analyst said.
“It’s probably the beginning of an exodus from Global Crossing,” said Eric Tutterow of Montpelier, Vt.-based KDP Investment Advisors.
Global Crossing agreed in February 2001 to develop and operate a network for processing transactions in 196 countries for Swift, the Society for Worldwide Interbank Financial Telecommunications.
“Given the uncertainty surrounding Global Crossing, there is no choice but for Swift and its community to be in control of its network,” Leonard Schrank, the Belgium-based consortium’s chief executive, said in an interview. Schrank declined to name companies that might get the work Global Crossing won’t perform.
Global Crossing is curtailing services it agreed to provide Swift as part of the bankruptcy reorganization plan, according to the company’s statement. Renegotiating the contract will lower costs, it said.
The loss of revenue from Swift could make Global Crossing less attractive to potential buyers, KDP’s Tutterow said.
Global Crossing, whose accounting is being investigated by the Securities and Exchange Commission, has a $750-million buyout offer from Hutchison Whampoa Ltd. and Singapore Technologies Telemedia.
Chief Executive John Legere has said at least 40 companies have expressed an interest in Global Crossing’s network of telecommunications lines, which link 200 cities in 27 countries.
