Internet provider Exodus Communications Inc has filed for bankruptcy, causing shares of Bermuda-based Global Crossing Ltd to plummet.

Global Crossing provides integrated telecommunications solutions over the world's first integrated global IP-based fibre optic network, and owns approximately 108 million common shares of Exodus.

In a statement released by Global Crossing, this week the company said they expect to reflect the revaluation of the carrying value of its investment in Exodus as a non-cash charge in its third quarter 2001 statement of operations.

Global Crossing's stake was worth $6.1 billion last year, when it acquired Exodus shares in exchange for Global's own Web-hosting business.

That investment was worth about $18m on Wednesday, as Exodus had fallen to 17 cents before being halted.

Global Crossing shares also fell 18 percent on Wednesday, following Exodus's bankruptcy filing and company CEO Tom Casey said: "Our existing forecasts for the next two years include immaterial amounts of revenue from Exodus. We believe firmly in the complex web hosting and managed services business model and believe that Exodus will continue to be an important provider of these services over the ten-year life of our contract with them."

Global Crossing, together with its subsidiary Asia Global Crossing, is the primary supplier of network services to Exodus, with a ten-year contract to provide at least 50 percent of Exodus's incremental network services outside Asia, and at least 60 percent in Asia.

This contract specifies that the supplier relationship would continue in the event of a change of control of Exodus, although the agreement is terminable two years after any acquisition of Exodus by a network provider.

Global Crossing offers web hosting and managed hosting services to its customers through a re-sale agreement with Exodus, but noted that its data service revenue has not been materially affected by this arrangement.

In the event that Exodus were unable to offer these services, Global Crossing could provide the services itself or through another supplier.

Based in Silicon Valley, Exodus was one of the most important operators of data centres that housed the equipment used to power some of the most popular websites, including Yahoo and eBay.

Exodus had a market capitalisation of about $48 billion when its shares peaked at $86, but the stock was halted on Nasdaq on Wednesday at 17 cents.

Exodus, which houses and manages website server computers for corporations, commanded a quarter of the hosting market share and had expected to achieve annual revenues of $1.3 billion this year.

However, rapid expansion and acquisition left it with more than $3 billion in debt and made it vulnerable to a sudden collapse in demand, caused by the dot com bust and the subsequent economic retrenchment.