Bermuda telecoms company Flag Telecom has been bought by India's largest private equity group for $207 million.

The international provider of bandwidth was bought up by the Reliance Group and represents the biggest ever overseas purchase by an Indian company.

Flag is one of three telecommunications companies that went into Chapter 11 bankruptcy following the telecoms crash which included Bermuda-based Global Crossing and Concert.

Flag Telecom defaulted on $0.6 billion of debt and the company filed for Chapter 11 protection in April, 2002 as it continued operations.

FLAG's principal creditors approved the main points of the restructuring plan and the company emerged from proceedings in October.

"The company believes that it can emerge from Chapter 11 and related proceedings with its global network intact, with a major reduction of its financial indebtedness and a reduced operating expense level that will still enable FLAG Telecom to service its customers," a release said at the time.

Sixty-three percent of the stock in the reorganised FLAG would be given to holders of the company's bond issues.

Banks who lent money to FLAG Atlantic Ltd., a subsidiary also incorporated in Bermuda, would receive a 26 percent stake in the new company.

In a release on Friday, the company said the acquisition will be carried out by Reliance Gateway, a wholly-owned unit of Reliance Infocomm.

Reliance Industries Ltd, India's top petrochemicals maker and number two refiner, holds a 45 percent stake in telecom service provider Reliance Infocomm.

Reliance Infocomm has set up a nation-wide broadband fibre optic network covering over 60,000 kilometres and more than 600 cities and towns in India.The Indian company is set to gain assets worth over $3 billion as a result of the acquisition. As the FLAG network spans four continents, upon completion of the purchase, Reliance users will have access to significantly lower rates, the company said.

Under the terms of the deal, Reliance Gateway will acquire 100 percent of Flag's common shares on a fully diluted basis for an aggregate purchase price of $207 million.The acquisition is subject to regulatory approvals and the approval of FLAG's shareholders who will meet in December to consider the proposal.

FLAG an acronym for "fibre-optic link around the globe" - sells capacity on its network to international telecommunications carriers, Internet service providers and other companies.

Registered in Bermuda, with its executive office in London, Flag has a customer base of more than 180 operators.

Flag owns and manages an optical fibre network spanning four continents and connecting business markets in Asia, Europe, the Middle East and the US, according to company sources.

It also owns and operates a low latency global MPLS (Multiprotocol Label Switching)-based IP (Internet Protocol) network, which connects most of the world's principal international Internet exchanges. Flag offers a range of products, including global bandwidth, IP, Internet, Ethernet and co-location services.