Late Offer Heats Up Global Crossing Bidding

A late offer from a group led by a former top Global Crossing Ltd. executive has turned the bidding process for the assets of the telecommunications company into a heated competition, delaying an auction winner for perhaps a week.

The group--headed by David Walsh, who left last fall as Global’s president and chief operating officer--is making a run for the vast fiber-optic network Global built. The group is expected to have the deep pockets of Bank One Corp. and its venture arm, One Equity Partners, behind it.

The Walsh group “bolted out of the blue” this month to become a serious contender for the assets of the firm as it seeks to reorganize under Chapter 11, said a source familiar with the bidding process.

Walsh has been at Global’s Madison, N.J., headquarters during the last few weeks assessing its financial condition and prospects, the source said.

Walsh did not return a telephone call to his office.

Bidding on Global’s assets, delayed from last week to today, now will be delayed further, possibly until an Aug. 7 hearing in U.S. Bankruptcy Court, a Global spokeswoman said.

Walsh is chairman of Moneyline Telerate, a worldwide provider of real-time information and transaction services to the capital markets. Moneyline is backed by One Equity Partners, and Walsh is a longtime friend of Bank One’s chairman and chief executive, James Dimon, the source said.

Moneyline also fits in with Global’s once-ambitious plans to serve the financial industry. Its prize contract was a $300-million deal with the Swift interbank network, a consortium of 7,000 banks and financial institutions in 196 countries that need a fast, secure network to help process $6 trillion in transactions daily.

Walsh, who is familiar with the company, is known on Wall Street and in financial circles and is building a portfolio of networking firms. He left Global after an apparent dispute with its chief executive, John Legere, who has since been credited with keeping the company together so it could be sold. But some believe the two can still work together.

Until Walsh came in, Global’s network connecting more than 200 cities in 27 countries had seemed a good bet to go to Los Angeles buyout specialists Tom and Alec Gores. The Gores brothers were believed to be the only serious bidders for the entire company, though a handful of others have bids on both big and small chunks of Global.

“It’s down to real arm-wrestling now,” said the source, who asked not to be identified. “There are very intense discussions going on now.”

The primary effort, people familiar with the talks said, is to arrange a package that would give Global’s bondholders and bankers enough money upfront, enough equity to make them meaningful partners and enough cash left over to put into operating the company and keeping it viable, thus increasing the value of their new stock.

Added to that balancing act are decisions that bidders have to make on Global’s value and the returns they can get on their investment, especially considering the growing amount of assets on the market from failed and failing telecoms.

Industry analysts including Vik Grover at Kaufman Bros. in New York believe the company would be better off with its previously stated plan to obtain new financing and emerge from bankruptcy proceedings free of old debt as a stand-alone firm.