Global Crossing, the US company which provides almost a third of the Republic's international telecoms capacity, filed for bankruptcy protection yesterday but insisted this would not affect its Irish operations.
The firm said it had been offered a $750 million (€870 million) investment from Asian firms, Hutchison Whampoa and Singapore technologies Telemedia, which was conditional on a restructuring plan going ahead before September.
The proposed restructuring is one of the largest ever involving a telecoms firm and is the latest in a series of financial problems for international telecoms firms. If it goes ahead, the restructuring would deal with Global Crossing's liabilities - worth more than $12.4 billion - but wipe out existing investors' holdings in the firm.
The deal will leave its existing common and preferred shareholders, including founder and chairman Mr Gary Winnick with nothing.
Global Crossing, which was one of the fastest growing and most successful telecoms firms during the late 1990s, forms the cornerstone of the Government's plans to promote the Republic as a centre for e-commerce. Its fibre network connects 27 countries and 200 cities worldwide and enables firms to send multimedia and data at very high speeds.
In June 1999, the Government signed a flagship deal to connect the Republic to 26 cities on its network in a public private partnership deal worth €126 million (£100 million). Global Crossing has already received €62 million from the State. It is due to receive an extra €14 million public funding this year to complete the project to connect the Republic to its international fibre network.
The project, which is almost complete, also forms the basis for the State's HEAnet project which links Irish universities with international research institutions.
Mr Dan Wagner, president of Global Crossing's European operations, told The Irish Times last night it was "business as usual" for Global Crossing's Irish and European operations.
He said the US chapter II filing would not affect customers or staff here and there was no plan to sell off Global Crossing's European operations.
Chapter II has been caused by a combination of several events, said Mr Wagner. "There was the fall-out in telecoms markets, a drop-off in demand and the availability of capital to keep the business running."
Mr Wagner also confirmed Global Crossing had asked the State to make a payment - believed to be worth €7.4 million - three months earlier than scheduled under its existing deal with the Government. A spokesman for the Minister for Public Enterprise said last night the Government was able to enhance the project's value by making the payment earlier. He said the Government had negotiated a 40 per cent reduction in operation and maintenance costs from Global Crossing and would now link with more than 50 cities.
He said the company had given the Government assurances that the Chapter II filing would have no impact on its European or Irish operations.
Global Crossing employs 70 staff in Dublin, where it operates a finance hub for Europe. It has also spent millions of euros on a cable landing station and its fibre network linking the Republic with the US and Europe. It is also the second major carrier with a base in Dublin to get into financial difficulty recently. Later this week NTL, a cable firm with operations in the Republic, the UK, Germany, France and Switzerland, is also expected to announce a major restructuring.
