The Asian arm of bankrupt telecom giant Global Crossing has been acquired by a company owned by the Chinese government in a deal involving two Bermuda companies.

Asia Global Crossing, which is a Bermuda-based subsidiary of Global Crossing, is an undersea cable company.

An offshore acquisition vehicle, Asia Netcom, was specially incorporated in Bermuda to buy the distressed assets of Asia Global Crossing.

The sale of Asia Global Crossing to China Netcom is the first cross-border acquisition of a telecoms business by a Chinese state-owned company and won the International Financial Law Review award for Asian merger and acquisition deal of the year.

The deal had a significant Bermuda element - both the seller and the purchaser were Bermuda incorporated holding companies.

Two local firms, Milligan-Whyte & Smith and Conyers Dill & Pearman, were listed as legal advisors in the transaction which was led by international firms, Shearman & Sterling, Gibson Dunn & Crutcher and Slaughter and May.

China Netcom are understood to have paid $270 million in equity and debt for the assets whose book value is around $1.2 billion.

The most significant hard asset being acquired is an 18,740 km sub-sea cable linking Hong Kong, Japan, Taiwan, South Korea, Singapore and the Philippines.

Milligan-Whyte & Smith partners Orlando Smith and John Milligan-Whyte said that their firm, acting for the sellers, had been involved in this deal since last November.

The award is a welcome piece of news for Milligan-Whyte & Smith whose corporate department was decimated in the past year with the departure of five lawyers, including the new Director of Public Prosecutions, Kulandra Ratneser, former partner Linda Milligan-Whyte, senior corporate lawyer, Bala Nadarajah, Jennifer Furbert and Dr. Ian Kawaley. Dr. Kawaley is understood to have been corporate litigator with most involvement in the Asia Global Crossing deal.

However Mr. Milligan-Whyte said that these departures were good for the firm and have not affected their capacity to undertake large transactions: "We have a history of expanding and contracting."

He said that a leaner operation was in line with Milligan Whyte & Smith's vision to be a world-class firm built on a different platform to its larger local competitors.

He said that the firm saw the Asian market as an exciting growth area and while it had not yet employed further lawyers, it had recruited a Mandarin and Cantonese speaking marketing consultant, Dai Min, to help stimulate potential China business.

Commenting on this new direction for the firm, John Milligan-Whyte said it was important for Bermuda firms not to rely entirely on insurance-related transactions.

"Bermuda has to continually build on what it has and to diversify into new industries."

The firm is now focusing on insolvency reorganisations, corporate administration and insurance work. "Bermuda has tremendous recognised and unrecognised value adding features for corporate reorganisations, finance and venture capital transactions," Mr. Milligan-Whyte said.