Bermuda-based telecommunications giant Global Crossing has started bankruptcy proceedings in the Supreme Court of Bermuda and in the US.

In a bid to restructure, the fibre-optic carrier has also agreed to a $750 million takeover bid by two Asian companies.

Global Crossing said yesterday that operations worldwide will be unaffected by the filing, but shareholders, including many local shareholders, will be left high and dry following the filing and many US analysts and investors told media groups yesterday that the bankruptcy was a “disaster.”

A US equity analyst speaking to Bloomberg News yesterday said: “It's awful for debt holders. It's awful for shareholders. It's a shame.”

One local disgruntled investor said yesterday that when Global Crossing had one line between the US and UK, the stock was worth $61 a share and now that they have the world wired, they are worth nothing.

He said: “It appears that the only one who would have made any money out of that operation was Gary Winnick, who managed to unload millions of dollars worth of his shares leaving the rest of us flying in the wind. Perhaps he picked up some additional lessons from the executives at Enron.”

Making the announcement yesterday, Global Crossing said it has signed a letter of intent with Hutchison Whampoa Limited and Singapore Technologies Telemedia Pte. Ltd. for a $750 million cash investment for a joint majority stake in the company's equity.

In order to begin restructuring, Global Crossing and certain of its affiliates commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda.

Under the terms of the proposed investment, which is conditional on - among other things - the confirmation of a plan of reorganisation by the courts before the end of August 2002, creditors would share in a combination of cash, new debt, and new equity in the restructured company.

However, existing common equity and preferred shareholders would not participate in the new capital structure.

John Legere, CEO of Global Crossing, tried to calm investors fears yesterday, saying: “We believe this new equity investment from parties as strong as Hutchison Whampoa and Singapore Technologies Telemedia validates our confidence in the strong future of our company.”

Mr. Legere said business would continue as usual during the restructuring process. Employees will continue to be paid their wages and other benefits without interruption. Worldwide operations will be unaffected by the filing and customers will not experience any changes in their service.

Hutchison Whampoa and Singapore Technologies Telemedia already have business relationships with Global Crossing and its affiliates. Asia Global Crossing and Hutchison Whampoa each own 50 percent of Hutchison Global Crossing, a leading telecommunications service provider in Hong Kong providing fixed-line, Internet and data services.

Asia Global Crossing and a subsidiary of Singapore Technologies Telemedia each own 50 percent of StarHub Crossing, which owns and operates a high capacity backhaul network in Singapore.

Global Crossing has struggled with the debt incurred from building its global network, which links more than 200 major cities in 27 countries.

The company, founded by former Drexel Burnham Lambert executive Gary Winnick in 1997, has been hurt by broadband overcapacity, rising debt and two straight quarters of slowing sales.

The company has $22.4 billion in assets and $12 billion in debt, and is the largest telecommunications company bankruptcy in history, and the fourth largest bankruptcy of all time behind Enron Corp, Texaco Inc. and Financial Corp. of America.

Yesterday's filings in the Supreme Court of Bermuda included writs for Atlantic Crossing Ltd., Atlantic Crossing Holding Ltd., South America Crossing Holding Ltd., Mid-Atlantic Crossing Ltd., Global Crossing Network Centre Ltd., Pan American Crossing Holdings Ltd., Global Crossing Ltd., Global Crossing International Ltd., Global Crossing Holdings Ltd., Atlantic Crossing II Ltd., Mid-Atlantic Crossing Holdings Ltd., Pan American Crossing Ltd.

Global Crossing shares fell 23 cents or 45 percent, to 28 cents in trading before US markets opened yesterday. The 52-week high for the stock was $25.87, meaning it has fallen 99 percent in the last year.

Yesterday, the stock was halted for trading on the New York Stock Exchange, as well as secondary trading on the Bermuda Stock Exchange at the request of the company.

No one from Global Crossing's Bermuda office could be contacted yesterday.