<PAGE>
As filed with the Securities and Exchange Commission on January 18, 2000
Registration No. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
GLOBAL CROSSING LTD.
(Exact name of registrant as specified in its charter)
---------------
Bermuda 4813 98-0189783
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of classification number) identification
incorporation or number)
organization)
Wessex House
45 Reid Street
Hamilton HM12, Bermuda
(441) 296-8600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
CT Corporation System
1633 Broadway
New York, NY 10019
(212) 479-8200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Copies to:
<TABLE>
<S> <C>
D. RHETT BRANDON, ESQ. JAMES C. GORTON, ESQ.
Simpson Thacher & Bartlett Global Crossing Ltd.
425 Lexington Avenue 360 N. Crescent Drive
New York, NY 10017 Beverly Hills, CA 90210
(212) 455-2000 (310) 385-5200
</TABLE>
---------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed Maximum
Aggregate Proposed Maximum
Title of Each Class of Securities Amount To Be Offering Aggregate Amount of
To Be Registered Registered Price per Share Offering Price Registration Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7% Cumulative Convertible Preferred
Stock, par value $0.01 per share
(the "Preferred Stock")............. 2,600,000 shares $270.875(1) $704,275,000(1) $185,928.60
- ----------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01
per share, issuable upon conversion 12,206,480
of the Preferred Stock.............. shares(2) (3) (3) (3)
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Common Stock, par value $0.01 per
share, issuable to pay dividends on
the Preferred Stock................. 800,000 shares $46.4375(4) $37,150,000(4) $ 9,807.60
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Total.............................. -- -- -- $195,736.20
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</TABLE>
(Footnotes appear on following page)
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which shall specifically state that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
(Footnotes from preceding page)
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 ("Rule 457") under the Securities Act of 1933, as amended (the
"Securities Act"), based on the average of the high bid and low ask prices
for the 7% Cumulative Convertible Preferred Stock (the "Preferred Stock")
on January 12, 2000.
(2) Including such indeterminate number of additional shares of Common Stock as
may become issuable upon conversion of the Preferred Stock.
(3) Pursuant to Rule 457(i) under the Securities Act, no additional filing fee
is required with respect to the shares of Common Stock issuable upon
conversion of the Preferred Stock.
(4) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act, based on the average of the high bid
and low ask prices for the Common Stock on the Nasdaq National Market on
January 12, 2000.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to completion, dated January 18, 2000
PROSPECTUS
[LOGO] Global Crossing ltd.
2,600,000 Shares of 7% Cumulative Convertible Preferred Stock
and
13,006,480 Shares of Common Stock
-----------
We issued the preferred stock in a private placement in December 1999. The
shares of preferred stock have been subject to important transfer restrictions
described in the offering memorandum that we used in that private placement.
This prospectus is part of a registration statement that registers under the
Securities Act the following securities to make them all freely tradeable:
. the shares of preferred stock of the holders named on page 63;
. the shares of common stock into which the shares of preferred stock may be
converted; and
. the shares of common stock that we may use to pay dividends on the shares
of preferred stock.
In particular:
. The holders of our preferred stock named on page 63 should deliver this
prospectus when they offer or sell their shares. Buyers who purchase from
them will receive freely tradeable stock.
. We will deliver this prospectus when any holder of preferred stock
converts shares of preferred stock into shares of our common stock, so
that this common stock is freely tradeable.
. We will deliver this prospectus in connection with resales of shares of
common stock that we may issue to pay cash dividends on the shares of
preferred stock, so that this common stock is freely tradeable.
Our common stock trades on the Nasdaq National Market and the Bermuda Stock
Exchange under the symbol "GBLX". On January 14, 2000, the closing bid price of
our common stock on the Nasdaq National Market was $51 3/16 per share. We do
not intend to list our preferred stock on any exchange or on Nasdaq.
-----------
Investing in our preferred stock and common stock involves risks, which we
describe in the "Risk Factors" section beginning on page 26 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
-----------
The date of this prospectus is .
<PAGE>
You should rely only on the information contained or incorporated by
reference in this prospectus and any prospectus supplement. We have not
authorized anyone to provide you with different information. We are not making
an offer to sell these securities in any state where the offer is not
permitted. You should not assume that the information contained in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front cover of those documents.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information....................................... ii
Incorporation by Reference................................................ ii
Summary................................................................... 1
Risk Factors.............................................................. 26
Cautionary Statement Regarding Forward-Looking Statements................. 36
Use of Proceeds........................................................... 36
Ratio of Earnings to Fixed Charges and Preferred Dividends................ 37
Pro Forma Ratio of Earnings to Fixed Charges and Preferred Dividends...... 37
Capitalization............................................................ 38
Dividend Policy........................................................... 38
Dilution.................................................................. 39
Description of the Preferred Stock........................................ 40
Book-Entry Procedures and Settlement...................................... 52
Description of the Common Stock........................................... 54
Certain Income Tax Consequences........................................... 56
Selling Shareholders...................................................... 63
Plan of Distribution...................................................... 64
Legal Matters............................................................. 66
Experts................................................................... 66
Service of Process and Enforcement of Liabilities......................... 66
</TABLE>
----------------
The Bermuda Monetary Authority has given its consent to the issue and the
transfer of the shares of preferred stock and common stock covered by this
prospectus. Approvals or permissions received from the Bermuda Monetary
Authority do not constitute a guaranty by the Bermuda Monetary Authority as to
our performance or our credit worthiness. Accordingly, in giving those
approvals or permissions, the Bermuda Monetary Authority will not be liable for
our performance or default or for the correctness of any opinions or statements
expressed in this document.
The Bermuda Monetary Authority has classified us as non-resident in Bermuda
for exchange control purposes. Accordingly, we may convert currency, other than
Bermuda currency, held for our account to any other currency without
restriction. Persons, firms or companies regarded as residents of Bermuda for
exchange control purposes require specific consent under the Exchange Control
Act, 1972 of Bermuda, and regulations promulgated under that Act, to purchase
any shares in our capital stock or any debt securities that we may issue. Under
the terms of the consent given to us by the Bermuda Monetary Authority, the
issuance and transfer of the shares of preferred stock and common stock covered
by this prospectus between persons, firms or companies regarded as non-resident
in Bermuda for exchange control purposes may be effected without further
permission from the Bermuda Monetary Authority.
----------------
i
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. You
may read and copy these reports, proxy statements and other information at the
public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the SEC's regional offices located
at 7 World Trade Center, 13th floor, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You may also obtain copies
of those materials at prescribed rates from the public reference section of the
SEC at 450 Fifth Street, Washington, D.C. 20549. You may obtain copies from the
public reference room by calling the SEC at (800) 732-0330. In addition, we are
required to file electronic versions of those materials with the SEC through
the SEC's EDGAR system. The SEC maintains a web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. You may also
review reports and other information concerning us at the offices of the
National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20001-1500.
You may also request a copy of those materials, free of cost, by writing or
telephoning us at the following address:
Investor Relations
Global Crossing Ltd.
360 N. Crescent Drive
Beverly Hills, CA 90210
310-385-5200
INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. We incorporate by reference in this
prospectus the information contained in the following documents:
. our annual report on Form 10-K for the fiscal year ended December 31,
1998;
. our quarterly reports on Form 10-Q, for the quarters ending March 31,
1999, June 30, 1999 and September 30, 1999;
. our current reports on Form 8-K filed on February 2, 1999; February 3,
1999; February 24, 1999; March 19, 1999; April 26, 1999; May 18, 1999;
May 21, 1999; May 26, 1999; July 16, 1999; July 20, 1999; September 3,
1999; September 10, 1999; September 30, 1999; October 12, 1999;
October 21, 1999; December 3, 1999; December 8, 1999; and January 11,
2000;
. our registration statement on Form S-4 (File No. 333-86693), filed with
the SEC on September 8, 1999, including those filings with the SEC made
by Frontier Corporation which are incorporated by reference into that
registration statement on page 172;
. the quarterly report on Form 10-Q of Frontier for the quarter ending
September 30, 1999;
. the current reports on Form 8-K of Frontier filed on September 30, 1999;
October 7, 1999; and October 12, 1999; and
. all documents that we file with the SEC under Sections 13(a), 13(c), 14
or 15 of the Securities Exchange Act of 1934 until all the shares of
preferred stock which this prospectus covers are sold and all shares of
common stock that we may issue under this prospectus are sold.
You may obtain copies of those documents from us, free of cost, by
contacting us at the address or telephone number provided in "Where You Can
Find More Information" immediately above.
Information that we file later with the SEC and that is incorporated by
reference in this prospectus will automatically update and supersede
information contained in this prospectus. You will be deemed to have notice of
all information incorporated by reference in this prospectus as if that
information was included in this prospectus.
ii
<PAGE>
SUMMARY
This section contains a general summary of the information contained in this
prospectus. It may not include all the information that is important to you.
You should read the entire prospectus, any accompanying prospectus supplement
and the documents incorporated by reference before making an investment
decision.
Global Crossing Ltd.
We are building and offering services over the world's first global fiber
optic network, consisting of 97,200 announced route miles and serving five
continents, 24 countries and more than 200 major cities. Upon completion of our
currently announced systems, our network and its telecommunications and
Internet product offerings will be available to over 80% of the world's
international communications traffic.
We are included in both the S&P 500 index and the Nasdaq 100 index. Our
operations are headquartered in Hamilton, Bermuda, with executive offices in
Los Angeles, California, Morristown, New Jersey and Rochester, New York.
We are incorporated in Bermuda, and the address of our principal executive
offices is Wessex House, 45 Reid Street, Hamilton HM12, Bermuda. Our telephone
number is 441-296-8600. You may visit us at our web site located at
www.globalcrossing.com.
About This Prospectus
Securities covered.......... This prospectus covers the offer and sale of the
following:
. up to 2,600,000 shares of preferred stock
which the shareholders named on page 63
own;
. up to 12,206,480 shares of our common
stock which we may issue upon conversion
of the shares of preferred stock; and
. up to 800,000 shares of our common stock
which we may issue to pay cash dividends
on the shares of preferred stock.
Terms of the Preferred Stock
Issuer...................... Global Crossing Ltd., a Bermuda company
Liquidation preference...... $250.00 per share
Dividends................... . Dividend rate: 7% of the liquidation
preference per annum on a cumulative basis
from the date of issuance
. Dividend payment dates: quarterly, on
February 1, May 1, August 1 and November 1
of each year, beginning on February 1,
2000
1
<PAGE>
. Type of dividend: Holders will receive
cash. We will have the option to deliver
shares of our common stock to the transfer
agent for the preferred stock, which will
resell those shares of common stock and
use the proceeds to pay cash dividends to
the holders of shares of preferred stock.
Conversion.................. Each share of preferred stock may be converted,
at the option of the holder, into 4.6948 shares
of our common stock.
. Conversion price: $53.25, subject to
adjustment in a number of circumstances
described under "Description of the
Preferred Stock--Adjustments to the
Conversion Price" on page 46
The right to convert shares that have been called
for redemption will terminate on the close of
business on the business day immediately
preceding the redemption day.
Non-mandatory redemption.... We may redeem for cash all or any part of the
shares of preferred stock in the following cases:
1.Optional redemption:
. Redemption period: at any time after
December 15, 2004, at our option
. Redemption price: 103.5% of the
liquidation preference if we redeem the
shares in 2004, and thereafter this
percentage gradually declines to 100%
on and after December 15, 2009, plus
accumulated and unpaid dividends to the
redemption date
2.Tax redemption:
. Redemption period: at any time, at our
option, if we are required to pay
additional amounts to the holders of
the shares of preferred stock to offset
specified adverse tax consequences
resulting from a change in applicable
laws or regulations
. Redemption price: 100% of the
liquidation preference, plus accrued
and unpaid dividends to the redemption
date
Mandatory redemption........ None
Change in control put right.. If we become subject to a change in control, each
holder of shares of preferred stock will have the
right to require us to purchase any or all of the
shares of that holder at a purchase price in cash
equal to 100% of the liquidation preference, plus
accumulated and unpaid dividends to the date of
purchase. This right of holders will be
2
<PAGE>
subject to our obligation to offer to repay a
substantial portion of our own and our
subsidiaries' indebtedness and offer to redeem
outstanding shares of a series of preferred stock
of a subsidiary that are tendered for redemption
in connection with a change in control of Global
Crossing. When we have satisfied these
obligations and, subject to the legal
availability of funds for this purpose, we will
purchase all shares tendered upon a change in
control.
Voting rights............... The holders of preferred stock will not be
entitled to any voting rights, except:
. as required by law;
. to approve amendments to the certificate
of designations of the preferred stock
which would adversely affect, alter or
change the powers, preferences or special
rights of the preferred stock; and
. if six quarterly dividends on the shares
of preferred stock are accrued and unpaid,
the holders of shares of preferred stock,
voting as a single class with holders of
other series of preferred stock that rank
equally or senior to the preferred stock
and have similar voting rights, will be
entitled to elect at the next annual
shareholder meeting two directors on our
board to serve until all accumulated and
unpaid dividends have been paid or
declared and funds have been set aside for
their payment.
Registration rights......... We have agreed for the benefit of the holders of
preferred stock that we will maintain a shelf
registration statement continuously effective
under the Securities Act for a period of up to
two years after the shelf registration statement
first becomes effective or for a shorter period
if all restricted securities traded under the
shelf registration statement have been sold.
If we do not satisfy these obligations, we will
be required to pay liquidated damages.
Ranking..................... The preferred stock will be, with respect to
dividend rights and upon liquidation, winding up
or dissolution:
. junior to all our existing and future debt
obligations;
. junior to each other class or series of
our capital stock other than (a) our
common stock and any other class or series
of our capital stock the terms of which
provide that that class or series will
rank junior to the preferred stock and (b)
any other class or series of our capital
stock the terms of which provide that that
class or series will rank on a parity with
the preferred stock;
. on a parity with each class or series of
our capital stock the terms of which
provide that that class or series will
rank on a parity with the preferred stock,
including
3
<PAGE>
(a) $1.0 billion of our 6 3/8% cumulative
convertible preferred stock which we
issued in a private placement on November
5, 1999 and (b) $400 million of our 6 3/8%
cumulative convertible preferred stock,
series B, which we issued to Hutchison
Whampoa Limited upon completion of the
transaction described in the second
paragraph under "-- Selected historical
financial information" on page 5; and
. senior to our common stock and any other
class or series of our capital stock the
terms of which provide that that class or
series will rank junior to the preferred
stock.
Use of proceeds............. We will not receive any proceeds from sales of
securities under this prospectus.
Trading..................... Our common stock currently trades on the Nasdaq
National Market and the Bermuda Stock Exchange
under the symbol "GBLX". We have not applied and
do not intend to apply for the listing of the
preferred stock on any securities exchange.
4
<PAGE>
Selected historical financial information
We acquired the Global Marine Systems business of Cable & Wireless Plc on
July 2, 1999 and Frontier on September 28, 1999.
On November 24, 1999, we formed, together with Softbank Corp. and Microsoft
Corporation, a new joint venture company called Asia Global Crossing. We have
contributed to Asia Global Crossing our 57.75% ownership interest in Pacific
Crossing and our development rights in East Asia Crossing. Among other things,
each of Softbank and Microsoft contributed $175 million in cash to Asia Global
Crossing. Also on November 24, 1999, we acquired Racal Telecom, a group of
wholly-owned subsidiaries of Racal Electronics plc. On January 12, 2000, we
formed a joint venture with Hutchison Whampoa Limited, called Hutchison Global
Crossing, and issued $400 million aggregate liquidation preference of our 6
3/8% cumulative convertible preferred stock, series B, to Hutchison.
In the following tables, we provide selected historical financial
information for (1) Global Crossing, (2) Global Marine Systems, (3) Frontier,
(4) Racal Telecom and (5) HCL Holdings Limited, a group of wholly-owned
subsidiaries of Hutchison Whampoa Limited which will be contributed into the
Hutchison Global Crossing joint venture. We do not provide any separate
historical financial information relating to the Asia Global Crossing joint
venture, as all relevant historical financial information is reflected in the
historical financial information of Global Crossing.
The selected historical financial information presented in the following
tables has been derived from the audited and unaudited financial statements of
Global Crossing, Global Marine Systems, Frontier, Racal Telecom and HCL
Holdings for the periods presented. This information is only a summary, and you
should read it together with the more detailed historical financial information
included or incorporated by reference in this document. For instructions on how
to obtain information incorporated by reference, see "Where You Can Find More
Information" on page ii.
Global Crossing selected historical financial information
The table below shows the selected historical financial information for
Global Crossing. This information has been prepared using the consolidated
financial statements of Global Crossing as of the dates indicated and for each
of the fiscal years in the period from inception, March 19, 1997, to December
31, 1998 and for the nine months ended September 30, 1999 and 1998. The
consolidated income statement data below for each of the fiscal years in the
period from inception, March 19, 1997, to December 31, 1998 and the
consolidated balance sheet data as of December 31, 1998 and 1997 have been
derived from financial statements audited by Arthur Andersen & Co., independent
public accountants, which are incorporated by reference in this document. We
derived the remaining data from unaudited condensed consolidated financial
statements.
In reading the following selected historical financial information, please
note the following:
. The statement of operations data for the nine months ended September 30,
1999 includes the results of Global Marine Systems for the period from
July 2, 1999, date of acquisition, through September 30, 1999. The
Consolidated Balance Sheet as of September 30, 1999 includes amounts
related to Global Marine Systems and Frontier.
. On September 28, 1999, Global Crossing announced the consummation of the
merger with Frontier resulting in Frontier becoming a wholly-owned
subsidiary of Global Crossing.
5
<PAGE>
Under the terms of the amended merger agreement for the Frontier
transaction, Frontier shareholders received 2.05 Global Crossing common
shares for each outstanding common share of Frontier for a total of
approximately 355 million shares. Upon the effectiveness of the merger,
the then outstanding and unexercised options exercisable for shares of
Frontier common stock were converted into options exercisable for an
aggregate of approximately 25 million shares of Global Crossing common
stock, having the same terms and conditions as the Frontier options,
except that the exercise price and the number of shares issuable upon
exercise were divided and multiplied, respectively, by 2.05. The
purchase price of $10.3 billion reflects a Global Crossing stock price
of $22 15/16 per share, the average closing price of Global Crossing
common stock from September 1, 1999 through September 3, 1999, and
includes long term debt, accrued interest and Frontier options assumed
by Global Crossing. For accounting purposes, the merger with Global
Crossing is deemed to have occurred as of the close of business on
September 30, 1999.
. On July 2, 1999, Global Crossing acquired the Global Marine Systems
business of Cable & Wireless Plc in a transaction valued at
approximately $870 million, consisting of a combination of cash and
assumed indebtedness. Global Crossing initially financed the acquisition
with committed bank financing in the amount of $600 million and the
remainder with cash on hand.
. On May 16, 1999, Global Crossing entered into a definitive agreement to
merge with U S WEST, Inc. The new company would have been 50% owned by
Global Crossing/Frontier shareholders and 50% owned by U S WEST
shareholders. As part of the transaction, U S WEST made a cash tender
offer for approximately 9.49% of Global Crossing common stock. The
tender offer was completed, with U S WEST acquiring 39,259,305 shares,
on June 21, 1999. On July 18, 1999, Global Crossing and U S WEST agreed
to terminate their merger agreement, and U S WEST agreed to merge with
Qwest Communications International Inc. As a result, U S WEST paid
Global Crossing a termination fee of $140 million in cash and returned
2,231,076 shares of Global Crossing common stock purchased in the tender
offer, and Qwest committed to purchase capacity on the Global Crossing
network at established market unit prices for delivery over the next
four years and committed to make purchase price payments to Global
Crossing for this capacity of $140 million over the next two years.
During the nine-months ended September 30, 1999, Global Crossing
recognized $210 million, net of merger related expenses, of other income
in connection with the termination of the U S WEST merger agreement.
. During the nine-month period ended September 30, 1999, Global Crossing
recorded a $15 million expense, net of tax benefit, due to the adoption
of Statement of Position 98-5, "Reporting on the Cost of Start-Up
Activities". See the "Cumulative effect of change in accounting
principles" item in the Statement of Operations Data.
. During the nine months ended September 30, 1999 and 1998 and the year
ended December 31, 1998, Global Crossing recognized $39 million, $33
million and $39 million, respectively, of stock-related expense relating
to stock options and rights to purchase stock issued during that period
which entitle the holders to purchase common stock. See the "Stock-
related expense" item in the Statement of Operations Data.
. The "Termination of advisory services agreement" item in the Statement
of Operations Data includes a charge for the termination of the advisory
services agreement as of June 30, 1998. Global Crossing acquired the
rights from those entitled to fees payable under the advisory services
agreement in consideration for the issuance of common stock having an
aggregate value of $135 million and the cancellation of approximately $3
million owed to Global Crossing under a related advance agreement. As a
result of this transaction, Global Crossing recorded a non-recurring
charge in the approximate amount of $138 million during the nine-month
period ended September 30, 1998 and the year ended December 31, 1998. In
addition, Global Crossing recognized as an expense approximately $2
million of advisory fees incurred prior to termination of the contract.
6
<PAGE>
. The "Provision for income taxes" item in the Statement of Operations
Data reflects income taxes on profits earned during the periods
presented in jurisdictions where Global Crossing has a taxable presence.
A significant portion of Global Crossing's operating losses have been
incurred in non-taxable jurisdictions, and, therefore, these operating
losses cannot be applied to offset Global Crossing's future taxable
earnings.
. In July 1999, Global Crossing recognized an extraordinary loss resulting
from the payoff of existing debt in connection with the commencement of
its $3 billion senior secured credit facility, comprised of a write-off
of $15 million of unamortized deferred financing costs.
. On May 18, 1998, a portion of the proceeds from the issuance of the 9
5/8% Senior Notes due 2008 of our subsidiary, Global Crossing Holdings
Ltd., was used to repurchase the 12% Senior Notes Due 2004 of Global
Telesystems Holdings Ltd. Global Crossing recognized an extraordinary
loss of approximately $20 million in connection with this repurchase,
comprised of a repurchase premium of approximately $10 million and a
write-off of approximately $10 million of unamortized deferred financing
costs. See the "Extraordinary loss on retirement of senior notes" item
in the Statement of Operations Data.
. The preferred stock dividends for the year ended December 31, 1998
include dividends from both the 10 1/2% Senior Exchangeable Preferred
Stock due 2008 of Global Crossing Holdings and the 14% Senior Increasing
Rate Redeemable Exchangeable Preferred Stock of Global Telesystems
Holdings. The Global Crossing Holdings preferred stock is mandatorily
redeemable on December 1, 2008 and exchangeable at any time by Global
Crossing Holdings into notes. The Global Crossing Holdings preferred
stock entitles the holders to receive cumulative compounding dividends
at an annual rate of 10 1/2%. The dividends can be paid in cash on or
prior to June 1, 2002 with the issuance of additional Global Crossing
Holdings preferred stock at the option of Global Crossing Holdings.
The holders of the Global Telesystems Holdings preferred stock were
entitled to receive cumulative, compounding dividends at an initial annual
rate of 14%. Preferred stock dividends include cumulative 14% dividends and
amortization of the discount and issuance costs. Global Crossing used
proceeds from the Global Crossing Holdings Senior Notes to redeem all
outstanding Global Telesystems Holdings preferred stock effective as of
June 17, 1998. All dividends before the redemption had been paid through
the issuance of additional preferred stock and charged against additional
paid-in capital. See the "Preferred stock dividends" item in the Statement
of Operations Data.
. As a result of the redemption of the Global Telesystems Holdings
preferred stock, Global Crossing incurred a one-time $34 million charge
against additional paid-in capital. The charge consisted of: (1) a $16
million charge for redemption premium and (2) a write-off of $18 million
of unamortized discount and unamortized deferred financing costs. See
the "Redemption of preferred stock" item in the Statement of Operations
Data.
. Global Crossing granted warrants to Pacific Capital Group, Inc., a
shareholder, and some of its affiliates for the Pacific Crossing, Mid-
Atlantic Crossing and Pan American Crossing systems and related rights.
The $275 million value of the common stock was allocated to
"Construction in progress" in the amount of $112 million and as
"Investment in affiliates" in the amount of $163 million. See the
"Construction in progress, property, plant and equipment and capacity
available for sale" item in the Balance Sheet Data.
. The "Investment in affiliates" item in the Balance Sheet Data includes
$163 million as of December 31, 1998 and September 30, 1999,
respectively, representing the value of the warrants described in the
bullet point immediately above applicable to the Pacific Crossing
system.
. The September 30, 1999 amount in the "Mandatorily redeemable preferred
stock" item in the Balance Sheet Data includes (1) $500 million of
Global Crossing Holdings preferred stock, less
7
<PAGE>
(2) $14 million reflecting the unamortized issuance costs. The December
31, 1998 amount includes (1) $500 million of Global Crossing Holdings
preferred stock, less (2) $17 million reflecting the unamortized
issuance costs. The December 31, 1997 amount includes (1) $100 million
of the Global Telesystems Holdings preferred stock originally issued,
plus (2) $10 million of Global Telesystems Holdings preferred stock
issued as dividends on the originally issued Global Telesystems Holdings
preferred stock, less (3) $19 million reflecting the unamortized
discount and issue costs, plus $1 million of accrued dividends. Global
Crossing redeemed all outstanding Global Telesystems Holdings preferred
stock effective as of June 17, 1998.
8
<PAGE>
Global Crossing Ltd. and Subsidiaries
(in thousands, except share and per share information)
<TABLE>
<CAPTION>
Period from
For the Nine For the Nine For the March 19, 1997
Months Ended Months Ended Year Ended (Date of Inception) to
September 30, 1999 September 30, 1998 December 31, 1998 December 31, 1997
------------------ ------------------ ----------------- ----------------------
(unaudited)
<S> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues................ $ 623,573 $ 218,949 $ 424,099 $ --
----------- ----------- ----------- -----------
Expenses:
Cost of sales........... 279,307 90,438 178,492 --
Operations,
administration and
maintenance............ 41,885 10,652 18,056 --
General and
administrative......... 73,344 16,936 26,844 1,657
Sales and marketing..... 36,462 13,655 26,194 1,366
Network development..... 15,572 7,234 10,962 78
Stock-related expense... 38,609 33,058 39,374 --
Depreciation and
amortization........... 16,370 545 -- --
Goodwill amortization... 3,758 -- -- --
Provision for doubtful
accounts............... 24,211 2,211 4,233 --
Termination of advisory
services agreement..... -- 139,669 139,669 --
----------- ----------- ----------- -----------
529,518 314,398 443,824 3,101
----------- ----------- ----------- -----------
Operating income
(loss)................. 94,055 (95,449) (19,725) (3,101)
Equity in loss of
affiliates............. (5,471) (1,037) (2,508) --
Other income (expense):
Interest income........ 45,663 14,260 29,986 2,941
Interest expense....... (81,538) (25,660) (42,880) --
Other income, net...... 215,982 -- -- --
Provision for income
taxes.................. (110,055) (16,332) (33,067) --
----------- ----------- ----------- -----------
Income (loss) before
cumulative effect of
change in accounting
principle and
extraordinary item..... 158,636 (124,218) (68,194) (160)
Cumulative effect of
change in accounting
principle.............. (14,711) -- -- --
Extraordinary loss on
retirement of senior
notes.................. (14,865) (19,709) (19,709) --
----------- ----------- ----------- -----------
Net income (loss)....... 129,060 (143,927) (87,903) (160)
Preferred stock
dividends.............. (41,313) (8,306) (12,681) (12,690)
Redemption of preferred
stock.................. -- (34,140) (34,140) --
----------- ----------- ----------- -----------
Net income (loss)
applicable to common
shareholders........... $ 87,747 $ (186,373) $ (134,724) $ (12,850)
=========== =========== =========== ===========
Net Income (Loss) per
Common Share:
Income (loss) applicable
to common shareholders
before cumulative item
and extraordinary
effect of change in
accounting principle
Basic.................. $ 0.28 $ (0.49) $ (0.32) $ (0.04)
=========== =========== =========== ===========
Diluted................ $ 0.28 $ (0.49) $ (0.32) $ (0.04)
=========== =========== =========== ===========
Shares used in computing
basic and diluted loss
per share:
Basic.................. 412,224,517 341,371,856 358,735,340 325,773,934
=========== =========== =========== ===========
Diluted................ 423,967,291 341,371,856 358,735,340 325,773,934
=========== =========== =========== ===========
</TABLE>
9
<PAGE>
Global Crossing Ltd. and Subsidiaries
(in thousands)
<TABLE>
<CAPTION>
December 31,
September 30, --------------------
1999 1998 1997
------------- ---------- --------
(unaudited)
Balance Sheet Data:
<S> <C> <C> <C>
Current assets including cash and
investments and restricted cash and
investments.............................. $ 1,108,936 $ 976,615 $ 27,744
Long-term restricted cash and
investments.............................. 297,088 367,600 --
Long-term accounts receivable............. 56,520 43,315 --
Construction in progress, property, plant
and equipment and capacity available for
sale..................................... 4,614,652 1,008,556 518,519
Goodwill, net............................. 8,439,758 -- --
Investment in affiliates.................. 224,960 177,334 --
Other assets.............................. 593,812 65,757 25,934
----------- ---------- --------
Total assets.......................... $15,335,726 $2,639,177 $572,197
=========== ========== ========
Current liabilities....................... $ 1,363,225 $ 256,265 $ 90,817
Long-term debt............................ 3,854,255 1,066,093 312,325
Deferred revenue.......................... 112,681 25,325 --
Obligations under inland service
agreements and capital leases............ 139,588 24,520 3,009
Deferred credits and other................ 147,729 9,654 --
----------- ---------- --------
Total liabilities..................... 5,617,478 1,381,857 406,151
Mandatorily redeemable preferred stock.... 485,647 483,000 91,925
Shareholders' equity
Common stock............................ 7,899 4,328 3,258
Treasury stock.......................... (209,415) (209,415) --
Other shareholders' equity.............. 9,393,120 1,067,470 71,023
Accumulated deficit..................... 40,997 (88,063) (160)
----------- ---------- --------
Total shareholders' equity............ 9,232,601 774,320 74,121
----------- ---------- --------
Total liabilities and shareholders'
equity............................... $15,335,726 $2,639,177 $572,197
=========== ========== ========
</TABLE>
10
<PAGE>
Global Marine Systems selected historical financial information
The table below shows selected historical financial information for Global
Marine Systems presented in United States GAAP. This information has been
prepared using the combined financial statements of Global Marine Systems as of
the dates indicated and for each of the fiscal years in the five-year period
ended March 31, 1999. The combined income statement data below for each of the
three fiscal years ended March 31, 1999 and the combined balance sheet data at
March 31, 1999 and 1998 were derived from United Kingdom GAAP financial
statements audited by KPMG Audit Plc, chartered accountants, which are
incorporated by reference in this document. The combined income statement data
below for each of the fiscal years ended March 31, 1996 and 1995 and the
combined balance sheet data as of March 31, 1997, 1996 and 1995 were derived
from management accounts.
The unaudited translations of Global Marine Systems' sterling amounts into
United States dollars have been translated using convenience translation rates
for the fiscal year ended March 31, 1999. The convenience translations should
not be construed as representations that the sterling amounts have been, could
have been or could in the future be converted into United States dollars at
this rate or any other rate of exchange.
<TABLE>
<CAPTION>
For the Years Ended March 31,
----------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------------------ --------------- --------------- --------------- ---------------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating revenues...... $347,335 (Pounds)209,997 (Pounds)170,953 (Pounds)181,987 (Pounds)147,996 (Pounds) 79,778
Income from continuing
operations............. 47,051 28,447 13,843 18,992 26,923 10,829
Total assets............ 753,333 466,749 441,899 380,635 359,148 235,459
Long-term obligations... $261,923 (Pounds)162,282 (Pounds)198,055 (Pounds)163,209 (Pounds)167,454 (Pounds) 54,900
</TABLE>
Frontier selected historical financial information
The table below shows selected historical financial information for
Frontier. This information has been prepared using the consolidated financial
statements of Frontier as of the dates indicated and for each of the fiscal
years in the five-year period ended December 31, 1998 and for the nine months
ended September 30, 1999 and 1998. The consolidated income statement data below
for each of the fiscal years in the five-year period ending December 31, 1998
and the consolidated balance sheet data as of December 31, 1994 through
December 31, 1998 have been derived from financial statements audited by
PricewaterhouseCoopers LLP, independent accountants, of which the financial
statements for the three-year period ending December 31, 1998 are incorporated
by reference in this document. Global Crossing derived the remaining data from
unaudited consolidated financial statements, which are incorporated by
reference in this document.
Revenues have been impacted by the following acquisitions for the periods
presented:
. On February 27, 1998, Frontier acquired GlobalCenter Inc., a leading
provider in digital distribution, Internet and data services
headquartered in Sunnyvale, California. Frontier acquired all of the
outstanding shares of GlobalCenter and issued 6.4 million shares to
effect this merger. At the time of the merger, GlobalCenter had 1.1
million stock options and warrants outstanding as converted into
Frontier equivalents. This transaction was accounted for using the
pooling of interests method of accounting and, accordingly, historical
information has been restated to include GlobalCenter.
. In August 1995, Frontier merged with ALC Communications Corporation.
Frontier exchanged two shares of its common stock for each ALC common
share. The total shares issued by Frontier to effect the merger were
69.2 million. In March 1995, Frontier acquired American Sharecom Inc.
Frontier acquired all of the outstanding shares of American Sharecom for
approximately 8.7 million shares of Frontier common stock. These
transactions were accounted for as poolings of interests and,
accordingly, historical information has been restated to include ALC and
American Sharecom.
11
<PAGE>
. In 1995, Frontier paid $318.4 million in cash for several acquisitions
that were accounted for as purchases. These purchase acquisitions were
Minnesota Southern Cellular Telephone Company, ConferTech International,
Inc., WCT Communications, Inc., Enhanced Telemanagement, Schneider
Communications, Inc. and Schneider Communications' 80.8 percent interest
in LinkUSA Corporation and Link-VTC, Inc. In February 1996, Frontier
acquired the remaining 19.2 percent interest in LinkUSA Corporation for
$2.3 million in cash, and in June 1996 made a payment of $4.3 million to
Link-VTC, Inc. in settlement of the original earnout agreement.
The following extraordinary, unusual or infrequently occurring items have
impacted net income for the periods presented:
. During the nine-month period ended September 30, 1999, Frontier recorded
a $74.5 million charge for costs related to the merger with Global
Crossing. These charges primarily include investment banker fees, legal
fees, accelerated restricted stock compensation and other direct costs.
. In the first quarter of 1998, Frontier recorded a pre-tax charge of $6.5
million associated with the acquisition of GlobalCenter. These charges
included investment banker fees, legal fees and other direct costs.
. In October 1997, Frontier recorded a pre-tax charge of $86.8 million
consisting of a restructuring charge of $43.0 million and a provision
for asset and lease impairments of $43.8 million. The restructuring
charge was primarily associated with a workforce reduction, program
cancellations and discontinuing some product lines. The provision for
asset and lease impairments primarily relates to long term assets and
some lease obligations Frontier was in the process of disposing of or
exiting.
. In March 1997, Frontier recorded a $96.6 million pre-tax charge
primarily related to the write-off of certain leased network facilities
no longer required as a result of the migration of Frontier's major
carrier customer's one-plus traffic volume to other networks and
Frontier's overall network integration efforts.
. In November 1996, Frontier recorded a $48.8 million pre-tax charge. This
charge included $28.0 million for the curtailment of specified Frontier
pension plans and a $20.8 million charge primarily to the write-off of
unrecoverable product development costs for its conference calling
product line.
. In December 1996, Frontier, through GlobalCenter, recorded a pre-tax
charge of $18.9 million related to the write-off of in-process product
development costs associated with the 1996 merger with GCIS, an Internet
management services company.
. Frontier's 1995 operating results reflect pre-tax acquisition related
charges of $114.2 million associated with the integration of a number of
long distance companies acquired during the year, including the August
1995 merger with ALC Communications.
. Frontier determined in 1995 that Statement of Financial Accounting
Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation", was no longer applicable based upon changes in regulation,
increasingly rapid advancements in telecommunications technology and
other factors creating competitive markets. As a result of the
discontinuance of FAS 71, Frontier recorded a non-cash extraordinary
charge of $112.1 million, net of an income tax benefit of $68.4 million,
as of September 30, 1995. Frontier also recorded a $9.0 million loss on
the early extinguishment of debt in 1995.
12
<PAGE>
Frontier Corporation and Subsidiaries
(in thousands, except per share information)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended Year Ended December 31,
September 30, September 30, ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------- ------------- ---------- ---------- ---------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statements
of Income:
Revenues................ $ 1,995,556 $1,938,522 $2,593,558 $2,374,809 $2,588,519 $2,150,328 $1,667,545
Costs and expenses...... 1,835,514 1,708,518 2,276,162 2,288,651 2,220,296 1,865,492 1,341,919
----------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income........ 160,042 230,004 317,396 86,158 368,223 284,836 325,626
Interest expense........ 48,739 39,516 55,318 48,239 43,312 53,572 50,216
Other income, net of
other expense.......... 19,643 33,480 45,025 38,070 15,850 14,991 20,922
Income taxes............ 77,181 96,634 129,560 44,188 142,556 101,126 109,078
----------- ---------- ---------- ---------- ---------- ---------- ----------
Income before
extraordinary items and
cumulative effect of
changes in accounting
principles............. 53,765 127,334 177,543 31,801 198,205 145,129 187,254
Extraordinary items..... -- -- -- -- -- (121,208) --
Cumulative effect of
changes in accounting
principles............. -- (1,755) (1,755) -- (8,018) (1,477) (7,197)
----------- ---------- ---------- ---------- ---------- ---------- ----------
Consolidated net
income................. 53,765 125,579 175,788 31,801 190,187 22,444 180,057
Dividends on preferred
stock.................. (510) (754) (1,005) (1,019) (1,182) (1,191) (1,187)
----------- ---------- ---------- ---------- ---------- ---------- ----------
Income applicable to
common stock........... $ 53,255 $ 124,825 $ 174,783 $ 30,782 $ 189,005 $ 21,253 $ 178,870
=========== ========== ========== ========== ========== ========== ==========
Earnings per common
share:
Income before
extraordinary item and
cumulative effect of
changes in accounting
principles
Basic.................. $ 1.03 $ .18 $ 1.19 $ .94 $ 1.26
Diluted................ 1.02 .18 1.18 .88 1.16
Cash dividends declared
per common share....... $ .100 $ .668 $ .89 $ .875 $ .855 $ .835 $ .815
Consolidated Balance
Sheets (at period end):
Current assets.......... $ 644,023 $ 566,674 $ 490,305 $ 477,761 $ 524,200 $ 673,826
Property, plant and
equipment, net......... 2,189,138 1,677,559 1,046,884 975,982 883,046 1,034,442
Goodwill and customer
base, net.............. 7,794,241 484,015 517,754 538,296 550,081 222,442
Deferred and other
assets................. 431,614 330,495 432,977 237,353 154,088 130,084
----------- ---------- ---------- ---------- ---------- ----------
Total assets........... $11,059,016 $3,058,743 $2,487,920 $2,229,392 $2,111,415 $2,060,794
=========== ========== ========== ========== ========== ==========
Current liabilities..... $ 750,974 $ 567,697 $ 492,978 $ 424,397 $ 506,073 $ 305,698
Long-term debt.......... 1,800,651 1,350,821 934,681 677,570 618,867 661,549
Other long-term
liabilities............ 31,928 -- -- -- -- --
Deferred income taxes... -- 40,046 10,927 2,542 15,644 98,217
Deferred employee
benefits obligation.... 89,596 81,925 74,965 57,573 58,385 46,001
Shareholder's equity.... 8,385,867 1,018,254 974,369 1,067,310 912,446 949,329
----------- ---------- ---------- ---------- ---------- ----------
Total liabilities and
shareholders' equity.. $11,059,016 $3,058,743 $2,487,920 $2,229,392 $2,111,415 $2,060,794
=========== ========== ========== ========== ========== ==========
</TABLE>
13
<PAGE>
Racal Telecom selected historical financial information
The table below shows selected historical financial information for Racal
Telecom prepared in United States GAAP. This information has been prepared
using the combined financial statements of Racal Telecom as of the dates
indicated and for each of the fiscal years in the three-year period ended March
31, 1999. The combined income statement data below for each of the two years
ended March 31, 1999 and the combined balance sheet data at March 31, 1999 and
1998 were derived from financial statements audited by Deloitte & Touche,
chartered accountants, which are incorporated by reference in this document. We
derived the remaining data from unaudited combined financial statements.
The unaudited translations of Racal Telecom's sterling amounts into United
States dollars have been translated using convenience translation rates for the
fiscal year ended March 31, 1999. The convenience translations should not be
construed as representations that the sterling amounts have been, could have
been or could in the future be converted into United States dollars at this
rate or any other rate of exchange.
<TABLE>
<CAPTION>
For the Years Ended March 31,
------------------------------------------------------------
1999 1998 1997
--------------------------- --------------- ---------------
(unaudited) (in thousands)
<S> <C> <C> <C> <C>
Revenues................ $492,130 (Pounds)295,800 (Pounds)273,000 (Pounds)260,000
Income (loss) from
continuing operations.. (30,450) (18,300) 12,100 16,000
Total assets............ 656,250 401,200 355,900 311,700
Long-term obligations... $118,920 (Pounds) 72,700 (Pounds) 86,400 (Pounds)101,200
</TABLE>
HCL Holdings selected historical financial information
The table below shows selected historical financial information for HCL
Holdings prepared in United States GAAP. This information has been prepared
using the combined financial statements of HCL Holdings as of the dates
indicated and for each of the years in the three-year period ended December 31,
1998 and for the nine months ended September 30, 1999 and 1998. The combined
financial information below as of and for each of the three years ended
December 31, 1998 were derived from financial statements audited by
PricewaterhouseCoopers, certified public accountants, which are incorporated by
reference in this document. The combined financial information below as of and
for the nine months ended September 30, 1999 and 1998 were derived from
unaudited combined financial statements.
<TABLE>
<CAPTION>
For the Nine For the Nine
Months Ended Months Ended For the Years Ended December 31,
September 30, September 30, --------------------------------------
1999 1998 1998 1997 1996
------------- ------------- ------------ ------------ ----------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C>
Revenues................ HK$ 615,940 HK$ 735,933 HK$ 950,120 HK$1,262,106 HK$790,995
Income (loss) from
continuing operations.. (190,748) HK$(177,318) (279,526) (356,847) (153,626)
Total assets............ 2,364,497 1,857,539 1,369,610 705,687
Long-term obligations... HK$3,022,594 HK$2,306,024 HK$1,403,847 HK$704,586
</TABLE>
14
<PAGE>
The unaudited translations of HCL Holdings' Hong Kong dollar amounts into
United States dollars have been translated using convenience translation rates
for the fiscal year ended December 31, 1998 and for the nine months ended
September 30, 1999. The convenience translations should not be construed as
representations that the Hong Kong dollar amounts have been, could have been or
could in the future be converted into United States dollars at this rate or any
other rate of exchange.
<TABLE>
<CAPTION>
For the Nine For the Year
Months Ended Ended
September 30, December 31,
1999 1998
------------- ------------
(unaudited)
(in thousands)
<S> <C> <C>
Revenues...................................... $ 79,429 $122,664
Income (loss) from continuing operations...... (24,598) (36,088)
Total assets.................................. 304,401 239,794
Long-term obligations......................... $389,123 $297,690
</TABLE>
15
<PAGE>
Recent Financial Accounting Developments
As a result of Financial Accounting Standards Board (FASB) Interpretation
No. 43, "Real Estate Sales, an interpretation of FASB Statement No. 66" (FIN
43), which became effective July 1, 1999, certain sales of capacity may no
longer be recognized as revenue at the time the circuits are activated. We
believe that our sales of subsea capacity will continue to be recognized as
revenue upon activation of those circuits, because we believe that subsea
capacity contracts meet the conditions for sales type lease accounting.
Beginning July 1, 1999, revenues from the sale of terrestrial backhaul circuits
are being amortized over the terms of the contracts. The result was a deferral
of $16 million of revenue related to terrestrial backhaul circuits activated
during the third quarter. Previously, these circuits would have been recognized
as current revenue. This deferral in revenue recognition has no impact on cash
flow. We note that accounting practice and authoritative guidance on this
subject are still evolving, with resolution expected within the next several
months.
With the acquisition of Frontier completed, we now expect services to be a
significant source of revenue on each of our systems. Therefore, beginning
October 1, 1999, we initiated service contract accounting for our subsea
systems. Under service contract accounting, the investment in both subsea and
terrestrial systems will be depreciated over their economic lives, and revenues
related to service contracts will be recognized over the terms of the
contracts. However, revenues and costs related to the sale of indefeasible
rights of use for subsea circuits will continue to be recognized upon
activation when appropriate. If we had adopted service contract accounting
effective January 1, 1999, there would not have been a material impact on our
results of operations during the year.
16
<PAGE>
Global Crossing Ltd.
Selected unaudited pro forma financial information
The following unaudited pro forma condensed combined financial information
of Global Crossing, Global Marine Systems, Frontier, Racal Telecom and the
Hutchison Global Crossing joint venture, which we refer to as "Pro Forma Global
Crossing Ltd.", has been prepared to demonstrate how these companies or
businesses might have looked if (1) the Global Marine Systems acquisition and
related financing, (2) the Frontier acquisition, (3) the Racal Telecom
acquisition and related financing, (4) the Hutchison Global Crossing joint
venture, including the related issuance of the 6 3/8% cumulative convertible
preferred stock, series B, of Global Crossing, (5) the offering of the 6 3/8%
cumulative convertible preferred stock of Global Crossing completed on November
5, 1999, (6) the offering of the 9 1/8% senior notes due 2006 and 9 1/2% senior
notes due 2009 of Global Crossing Holdings completed on November 19, 1999 and
the application of the net proceeds of that offering and (7) the offering of
the 7% cumulative convertible preferred stock of Global Crossing completed on
December 15, 1999 had been completed as of the dates or at the beginning of the
periods presented. This pro forma information does not give effect to the $350
million cash received in connection with the formation of the Asia Global
Crossing joint venture.
We have prepared the pro forma financial information using the purchase
method of accounting. We expect that we will have reorganization and
restructuring expenses and potential synergies relating to the acquisitions of
Global Marine Systems and Racal Telecom, the Hutchison Global Crossing joint
venture and the acquisition of Frontier's long distance business and increased
opportunities to earn more revenue as a result of those transactions. The
unaudited pro forma information does not reflect these expenses and synergies.
The pro forma information, while helpful in illustrating the financial
characteristics of the combined company under one set of assumptions, does not
attempt to predict or suggest future results. The pro forma information also
does not attempt to show how the combined company would actually have performed
had the companies been combined throughout these periods. If the companies had
actually been combined in prior periods, these companies and businesses might
have performed differently. You should not rely on pro forma financial
information as an indication of the results that would have been achieved if
the Global Marine Systems, Frontier and Racal Telecom acquisitions and the
Hutchison Global Crossing joint venture had taken place earlier or the future
results that the companies will experience after completion of these
transactions.
These unaudited pro forma condensed combined financial statements should be
read in conjunction with the historical financial statements of Global
Crossing, Global Marine Systems, Frontier, Racal Telecom and HCL Holdings,
which are incorporated by reference in this document.
We have tentatively considered the carrying value of the acquired assets to
approximate their fair value, with all of the excess of those acquisition costs
being attributable to goodwill. We are in the process of fully evaluating the
assets acquired and, as a result, the purchase price allocation among the
tangible and intangible assets acquired, and their related useful lives,
including goodwill, may change. The initial evaluation of goodwill anticipates
a useful life of 25 years.
17
<PAGE>
Pro Forma Global Crossing Ltd.
Unaudited Pro Forma Condensed Combined Balance Sheet
as of September 30, 1999
(in thousands)
<TABLE>
<CAPTION>
Global Racal Racal Hutchison Global
Crossing Financing Telecom Telecom Global Crossing Crossing
Historical(1) Adjustments(2) Pro Forma(3) Adjustments(4) Adjustments(5) Pro Forma
------------- -------------- ------------ -------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash, restricted cash
and investments....... $ 319,169 $ 3,571,800 $ 28,872 $(1,650,000) $(50,000) $ 1,839,243
(1,480,598) 1,100,000
Accounts receivable,
net................... 623,170 -- 107,933 -- -- 731,103
Prepaid and other...... 166,597 -- 47,813 -- -- 214,410
----------- ----------- -------- ----------- -------- -----------
Total current
assets.............. 1,108,936 2,091,202 184,618 (550,000) (50,000) 2,784,756
Restricted cash and cash
equivalents............ 297,088 -- -- -- -- 297,088
Accounts receivable..... 56,520 -- -- -- -- 56,520
Property, plant and
equipment, net......... 2,541,883 -- 416,176 -- (83,800) 2,874,259
Construction in
process................ 2,072,769 -- -- -- -- 2,072,769
Goodwill and other
intangibles, net....... 8,439,758 -- -- 1,562,857 -- 10,002,615
Other assets, net....... 593,812 29,700 54,887 29,787 -- 677,371
(30,815)
Investment in
affiliates............. 224,960 -- 5,013 -- 538,800 768,773
----------- ----------- -------- ----------- -------- -----------
Total Assets......... $15,335,726 $ 2,090,087 $660,694 $ 1,042,644 $405,000 $19,534,151
=========== =========== ======== =========== ======== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt........ $ -- $ -- $249,861 $ -- $ -- $ 249,861
Accrued construction
costs................. 181,353 -- -- -- -- 181,353
Accounts payable and
accrued expenses...... 818,265 2,750 141,615 48,287 5,000 1,015,917
Other current
liabilities........... 363,607 -- 14,975 -- -- 378,582
----------- ----------- -------- ----------- -------- -----------
Total current
liabilities......... 1,363,225 2,750 406,451 48,287 5,000 1,825,713
Long-term debt.......... 3,088,913 (1,480,598) 102,223 1,100,000 -- 2,810,538
Senior notes............ 765,342 2,000,000 -- -- -- 2,765,342
Deferred credits and
other.................. 399,998 -- 46,377 -- -- 446,375
----------- ----------- -------- ----------- -------- -----------
Total Liabilities.... 5,617,478 522,152 555,051 1,148,287 5,000 7,847,968
----------- ----------- -------- ----------- -------- -----------
Mandatorily Redeemable
Preferred Stock........ 485,647 -- -- -- -- 485,647
Shareholders' equity:
6 3/8% Cumulative
Convertible Preferred
Stock................. -- 969,000 -- -- 400,000 1,369,000
7% Cumulative
Convertible Preferred
Stock................. -- 629,750 -- -- -- 629,750
Common stock........... 7,899 -- 32,728 (32,728) -- 7,899
Other shareholders'
equity................ 9,448,147 -- 5,818 (5,818) -- 9,448,147
Unearned compensation.. (72,799) -- -- -- -- (72,799)
Treasury stock......... (209,415) -- -- -- -- (209,415)
Retained earnings
(accumulated
deficit).............. 40,997 (30,815) 67,097 (67,097) -- 10,182
Accumulated other
comprehensive income.. 17,772 -- -- -- -- 17,772
----------- ----------- -------- ----------- -------- -----------
Total shareholders'
equity.............. 9,232,601 1,567,935 105,643 (105,643) 400,000 11,200,536
----------- ----------- -------- ----------- -------- -----------
Total liabilities and
shareholders'
equity.............. $15,335,726 $ 2,090,087 $660,694 $ 1,042,644 $405,000 $19,534,151
=========== =========== ======== =========== ======== ===========
</TABLE>
18
<PAGE>
Pro Forma Global Crossing Ltd.
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Nine Months Ended September 30, 1999
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Global
Global Global Marine Racal
Crossing Marine Systems Frontier Frontier Financing Telecom
Historical (6) Systems (7) Adjustments Historical Adjustments Adjustments Pro Forma(3)
-------------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating
Revenues........... $ 623,573 $173,498 $ -- $1,995,556 $ -- $ -- $258,082
----------- -------- -------- ---------- --------- --------- --------
Operating Expenses:
Operating,
selling, general
and
administrative.... 470,781 127,165 -- 1,551,234 -- -- 257,498
Stock-related
expense........... 38,609 -- -- 10,412 (10,412)(11) -- --
Merger Expenses... -- -- -- 74,519 -- -- --
Depreciation and
amortization...... 16,370 13,090 -- 173,600 -- -- 46,451
Goodwill
Amortization...... 3,758 539 (539)(8) 25,749 (25,749)(12) -- --
14,126 (8) 292,284 (12)
----------- -------- -------- ---------- --------- --------- --------
529,518 140,794 13,587 1,835,514 256,123 -- 303,949
----------- -------- -------- ---------- --------- --------- --------
Operating income
(loss)............. 94,055 32,704 (13,587) 160,042 (256,123) -- (45,867)
Equity in income
(loss) of
affiliates......... (5,471) 4,539 -- 17,235 -- -- (560)
Other income
(expense):
Interest
expense........... (81,538) (6,869) (36,000)(9) (48,739) -- 52,183 (16) (30,908)
36,000 (16)
(182,487)(16)
Interest income... 45,663 511 -- 4,754 -- -- 3,089
Other income
(expenses)........ 215,982 143 -- (2,346) -- -- 369
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
before taxes and
cumulative effect
of changes in
accounting
principle.......... 268,691 31,028 (49,587) 130,946 (256,123) (94,304) (73,877)
(Provision)
benefit for
income taxes...... (110,055) (11,885) 15,200 (10) (77,181) -- (15,200)(16) 22,411
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
before cumulative
effect of changes
in accounting
principle.......... 158,636 19,143 (34,387) 53,765 (256,123) (109,504) (51,466)
Preferred stock
dividends......... (41,313) -- -- (510) 510 (13) (81,702)(17) --
Redemption of
preferred stock... -- -- -- -- (183)(14) -- --
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
applicable to
common shareholders
before cumulative
changes in
accounting
principle (Basic).. 117,323 19,143 (34,387) 53,255 (255,796) (191,206) (51,466)
Diluted earnings
adjustment........ -- -- -- -- (180)(15) -- --
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
applicable to
common shareholders
before cumulative
changes in
accounting
principle
(Diluted).......... $ 117,323 $ 19,143 $(34,387) $ 53,255 $(255,976) $(191,206) $(51,466)
=========== ======== ======== ========== ========= ========= ========
Income (loss) per
common share:
Income (loss)
applicable to
common
shareholders
before cumulative
effect of changes
in accounting
principle
Basic........... $ 0.28
===========
Diluted......... $ 0.28
===========
Shares used in
computing
information
applicable to
common
shareholders
Basic........... 412,224,517
===========
Diluted......... 423,967,291
===========
<CAPTION>
Hutchison
Racal Global Global
Telecom Crossing Crossing
Adjustments Adjustments(5) Pro Forma
---------------- -------------- ----------------
<S> <C> <C> <C>
Operating
Revenues........... $ -- $ -- $ 3,050,709
---------------- -------------- ----------------
Operating Expenses:
Operating,
selling, general
and
administrative.... -- -- 2,406,678
Stock-related
expense........... -- -- 38,609
Merger Expenses... -- -- 74,519
Depreciation and
amortization...... -- -- 249,511
Goodwill
Amortization...... 46,886 (4) 357,054
---------------- -------------- ----------------
46,886 -- 3,126,371
---------------- -------------- ----------------
Operating income
(loss)............. (46,886) -- (75,662)
Equity in income
(loss) of
affiliates......... -- (16,383) (12,939)
(12,299)
Other income
(expense):
Interest
expense........... (77,043)(18) -- (375,401)
Interest income... -- -- 54,017
Other income
(expenses)........ -- -- 214,148
---------------- -------------- ----------------
Income (loss)
before taxes and
cumulative effect
of changes in
accounting
principle.......... (123,929) (28,682) (195,837)
(Provision)
benefit for
income taxes...... 23,883 (19) -- (152,827)
---------------- -------------- ----------------
Income (loss)
before cumulative
effect of changes
in accounting
principle.......... (100,046) (28,682) (348,664)
Preferred stock
dividends......... -- (19,125) (142,140)
Redemption of
preferred stock... -- -- (183)
---------------- -------------- ----------------
Income (loss)
applicable to
common shareholders
before cumulative
changes in
accounting
principle (Basic).. (100,046) (47,807) (490,987)
Diluted earnings
adjustment........ -- -- (180)
---------------- -------------- ----------------
Income (loss)
applicable to
common shareholders
before cumulative
changes in
accounting
principle
(Diluted).......... $(100,046) $(47,807) $ (491,167)
================ ============== ================
Income (loss) per
common share:
Income (loss)
applicable to
common
shareholders
before cumulative
effect of changes
in accounting
principle
Basic........... $ (0.64)
================
Diluted......... $ (0.64)
================
Shares used in
computing
information
applicable to
common
shareholders
Basic........... 767,484,627 (20)
================
Diluted......... 767,484,627 (20)
================
</TABLE>
19
<PAGE>
Pro Forma Global Crossing Ltd.
Unaudited Pro Forma Condensed Combined Statements of Operations
For the year ended December 31, 1998
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Racal
Global Global Global Marine Telecom
Crossing Marine Systems Frontier Frontier Financing Pro
Historical Systems(7) Adjustments Historical Adjustments Adjustments Forma(3)
----------- ---------- ------------- ---------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues $ 424,099 $347,335 $ -- $2,593,558 $ -- $ -- $327,199
----------- -------- -------- ---------- --------- --------- --------
Operating Expenses:
Operating,
selling, general
and
administrative ... 264,781 233,209 -- 2,043,740 -- -- 296,723
Termination of
Advisory Services
Agreement......... 139,669 -- -- -- -- -- --
Stock-related
expense........... 39,374 -- -- 6,616 (6,616)(11) -- --
Depreciation and
amortization...... -- 37,412 -- 189,804 -- 54,999
Goodwill
amortization...... -- 1,318 (1,318)(8) 36,002 (36,002)(12) -- --
28,253 (8) 389,712 (12)
----------- -------- -------- ---------- --------- --------- --------
443,824 271,939 26,935 2,276,162 347,094 -- 351,722
----------- -------- -------- ---------- --------- --------- --------
Operating income
(loss)............. (19,725) 75,396 (26,935) 317,396 (347,094) -- (24,523)
Equity in income
(loss) of
affiliates......... (2,508) 4,732 -- 16,711 -- -- (253)
Other income
(expense):
Interest
expense........... (42,880) (11,176) (48,000)(9) (55,318) -- 41,278 (16) (35,957)
48,000 (16)
(243,316)(16)
Interest income... 29,986 3,793 -- 5,084 -- -- 5,353
Other income
(expense)......... -- -- -- 23,230 -- -- 369
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
before taxes,
extraordinary item
and cumulative
effect of changes
in accounting
principle.......... (35,127) 72,745 (74,935) 307,103 (347,094) (154,038) (55,011)
(Provision)
benefit for
income taxes...... (33,067) (25,693) 20,256 (10) (129,560) -- (20,256)(16) 16,954
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
before
extraordinary item
and cumulative
effect of changes
in accounting
principle.......... (68,194) 47,052 (54,679) 177,543 (347,094) (174,294) (38,057)
Preferred stock
dividends......... (12,681) -- -- (1,005) 1,005 (13) (108,935)(17) --
Redemption of
preferred stock... (34,140) -- -- -- (183)(14) -- --
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
applicable to
common shareholders
before
extraordinary item
and cumulative
changes in
accounting
principle (Basic).. (115,015) 47,052 (54,679) 176,538 (346,272) (283,229) (38,057)
Diluted earnings
adjustment........ -- -- -- 360 (360)(15) -- --
----------- -------- -------- ---------- --------- --------- --------
Income (loss)
applicable to
common shareholders
before
extraordinary item
and cumulative
changes in
accounting
principle
(Diluted).......... $ (115,015) $ 47,052 $(54,679) $ 176,898 $(346,632) $(283,229) $(38,057)
=========== ======== ======== ========== ========= ========= ========
Income (loss) per
common share:
Income (loss)
applicable to
common
shareholders
before
extraordinary
item and
cumulative effect
of changes in
accounting
principle
Basic........... $ (0.32)
===========
Diluted......... $ (0.32)
===========
Shares used in
computing
information
applicable to
common
shareholders
Basic........... 358,735,340
===========
Diluted......... 358,735,340
===========
<CAPTION>
Racal Hutchison Global
Telecom Global Crossing Crossing
Adjustments Adjustments(5) Pro Forma
--------------- --------------- -----------------
<S> <C> <C> <C>
Operating Revenues $ -- $ -- $ 3,692,191
--------------- --------------- -----------------
Operating Expenses:
Operating,
selling, general
and
administrative ... -- -- 2,838,453
Termination of
Advisory Services
Agreement......... -- -- 139,669
Stock-related
expense........... -- -- 39,374
Depreciation and
amortization...... -- -- 282,215
Goodwill
amortization...... 62,514 (4) -- 480,479
--------------- --------------- -----------------
62,514 -- 3,780,190
--------------- --------------- -----------------
Operating income
(loss)............. (62,514) -- (87,999)
Equity in income
(loss) of
affiliates......... -- (21,844) (21,206)
(18,044)
Other income
(expense):
Interest
expense........... (102,723)(18) -- (450,092)
Interest income... -- -- 44,216
Other income
(expense)......... -- -- 23,599
--------------- --------------- -----------------
Income (loss)
before taxes,
extraordinary item
and cumulative
effect of changes
in accounting
principle.......... (165,237) (39,888) (491,482)
(Provision)
benefit for
income taxes...... 31,844 (19) -- (139,522)
--------------- --------------- -----------------
Income (loss)
before
extraordinary item
and cumulative
effect of changes
in accounting
principle.......... (133,393) (39,888) (631,004)
Preferred stock
dividends......... -- (25,500) (147,116)
Redemption of
preferred stock... -- -- (34,323)
--------------- --------------- -----------------
Income (loss)
applicable to
common shareholders
before
extraordinary item
and cumulative
changes in
accounting
principle (Basic).. (133,393) (65,388) (812,443)
Diluted earnings
adjustment........ -- -- --
--------------- --------------- -----------------
Income (loss)
applicable to
common shareholders
before
extraordinary item
and cumulative
changes in
accounting
principle
(Diluted).......... $(133,393) $(65,388) $ (812,443)
=============== =============== =================
Income (loss) per
common share:
Income (loss)
applicable to
common
shareholders
before
extraordinary
item and
cumulative effect
of changes in
accounting
principle
Basic........... $ (1.15)
=================
Diluted......... $ (1.15)
=================
Shares used in
computing
information
applicable to
common
shareholders
Basic........... 708,518,093 (20)
=================
Diluted......... 708,518,093 (20)
=================
</TABLE>
20
<PAGE>
Pro Forma Global Crossing Ltd.
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
(1) This column represents the historical financial position of Global
Crossing as of September 30, 1999, including the assets acquired in the
Frontier merger and the Global Marine Systems acquisition.
(2) These adjustments represent the proceeds, financing fees and assumed
repayment of existing debt related to the issuance of the 9 1/8% senior
notes due 2006 and 9 1/2% senior notes due 2009 of Global Crossing
Holdings and the 6 3/8% cumulative convertible preferred stock and 7%
cumulative convertible preferred stock, including the over-allotment, of
Global Crossing. In connection with the issuance of the 9 1/8% senior
notes due 2006 and 9 1/2% senior notes due 2009 of Global Crossing
Holdings, Global Crossing incurred approximately $29.7 million in
financing fees. The financing fees will be amortized over the life of the
debt. As a result of Global Crossing's decision to repay certain existing
debt, Global Crossing recorded an extraordinary charge of approximately
$30.8 million during the fourth quarter of 1999.
(3) These columns represent Racal Telecom's results from operations and
balance sheet in United States GAAP, the disposal of the Racal Translink
and Racal Fieldforce divisions of Racal Telecommunications Limited which
were not acquired by Global Crossing, pro forma adjustments to reflect the
likely effect of the trading among Racal Translink, Racal Fieldforce and
Racal Telecom based on contractual obligations among the divisions. These
adjustments are summarised in the tables below:
Racal Telecom Pro Forma
as of October 15, 1999
(in thousands)
<TABLE>
<CAPTION>
BV Acquisition US GAAP
and and Accounting
Carve-Out Policy Racal Telecom
Historical(a) Adjustments(b) Adjustments(d) Pro Forma
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash, restricted cash
and investments....... $ 28,872 $ -- $ -- $ 28,872
Accounts receivable,
net................... 107,760 173 -- 107,933
Prepaid and other...... 64,661 293 (17,141) 47,813
--------- ----- -------- --------
Total current
assets.............. 201,293 466 (17,141) 184,618
Property, plant and
equipment, net......... 442,835 8 (26,667) 416,176
Other assets, net....... 42,077 -- 12,810 54,887
Investment in
affiliates............. 5,013 -- -- 5,013
--------- ----- -------- --------
Total Assets......... $ 691,218 $ 474 $(30,998) $660,694
========= ===== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt........ $ 249,568 $ 293 $ -- $249,861
Accounts payable and
accrued expenses...... 151,187 76 (9,648) 141,615
Other current
liabilities........... 14,333 -- 642 14,975
--------- ----- -------- --------
Total current
liabilities......... 415,088 369 (9,006) 406,451
Long-term debt.......... 102,223 -- -- 102,223
Deferred credits and
other.................. 24,929 -- 21,448 46,377
--------- ----- -------- --------
Total Liabilities.... 542,240 369 12,442 555,051
--------- ----- -------- --------
Shareholders' equity:
Common stock........... 32,692 36 -- 32,728
Other shareholders'
equity................ 5,818 -- -- 5,818
Retained earnings
(accumulated
deficit).............. 110,468 69 (43,440) 67,097
--------- ----- -------- --------
Total shareholders'
equity.............. 148,978 105 (43,440) 105,643
--------- ----- -------- --------
Total liabilities and
shareholders'
equity.............. $ 691,218 $ 474 $(30,998) $660,694
========= ===== ======== ========
</TABLE>
21
<PAGE>
Racal Telecom Pro Forma
Unaudited Pro Forma Condensed Combined Statements of Operations
For the Forty-one Weeks Ended October 15, 1999
(in thousands)
<TABLE>
<CAPTION>
US GAAP and
BV Acquisition Accounting Racal
and Carve-Out Policy Telecom
Historical(a) Adjustments Adjustments(d) Pro Forma
------------ -------------- -------------- ---------
<S> <C> <C> <C> <C>
Operating Revenues...... $390,578 $(110,354)(c) $(22,447) $258,082
305 (b)
-------- --------- -------- --------
Operating Expenses:
Operating, selling,
general and
administrative........ 355,110 (99,595)(c) 1,737 257,498
246 (b)
Depreciation and
amortization.......... 61,774 (11,978)(c) (3,340) 46,451
(5)(b)
-------- --------- -------- --------
416,884 (111,332) (1,603) 303,949
-------- --------- -------- --------
Operating income
(loss)................. (26,306) 1,283 (20,844) (45,867)
Equity in income (loss)
of affiliates.......... (560) -- -- (560)
Other income (expense):
Interest expense....... (30,905) (3)(b) -- (30,908)
Interest income........ -- 3,089 (c) -- 3,089
Other income
(expense)............. 76,390 (76,021)(c) -- 369
-------- --------- -------- --------
Income (loss) before
taxes and cumulative
effect of changes in
accounting principle... 18,619 (71,652) (20,844) (73,877)
(Provision) benefit for
income taxes.......... 3,563 (70)(b) 18,918 22,411
-------- --------- -------- --------
Income (loss) before
cumulative effect of
changes in accounting
principle.............. $ 22,182 $ (71,722) $ (1,926) $(51,466)
======== ========= ======== ========
</TABLE>
Racal Telecom Pro Forma
Unaudited Pro Forma Condensed Combined Statement of Operations
For the year ended March 31, 1999
(in thousands)
<TABLE>
<CAPTION>
US GAAP and
BV Acquisition Accounting Racal
and Carve-Out Policy Telecom
Historical(a) Adjustments Adjustments(d) Pro Forma
------------- -------------- -------------- ---------
<S> <C> <C> <C> <C>
Operating Revenues...... $489,299 $(162,277)(c) $ (496) $327,199
673 (b)
-------- --------- ------- --------
Operating Expenses:
Operating, selling,
general and
administrative ....... 413,617 (124,687)(c) 7,298 296,723
495 (b)
Depreciation and
amortization.......... 73,376 (14,541)(c) (3,869) 54,999
33 (b)
-------- --------- ------- --------
486,993 (138,700) 3,429 351,722
-------- --------- ------- --------
Operating income
(loss)................. 2,306 (22,904) (3,925) (24,523)
Equity in income (loss)
of affiliates.......... (253) -- -- (253)
Other income (expense):
Interest expense....... (35,983) (14)(b) 40 (35,957)
Interest income........ 291 5,062 (c) -- 5,353
Other income
(expense)............. 369 -- -- 369
-------- --------- ------- --------
Income (loss) before
taxes, extraordinary
item and cumulative
effect of changes in
accounting principle... (33,270) (17,856) (3,885) (55,011)
(Provision) benefit for
income taxes.......... 3,946 6,053 (c) 7,025 16,954
(70)(b)
-------- --------- ------- --------
Income (loss) before
extraordinary item and
cumulative effect of
changes in accounting
principle.............. $(29,324) $ (11,873) $ 3,140 $(38,057)
======== ========= ======= ========
</TABLE>
(a) This column represents the combined historical results of operations
and financial position of Racal Telecommunications Limited, Racal
Telecommunications Networks Limited, Racal Internet Services Limited
and Racal Telecommunications Inc., which we refer to as "Racal
Telecom", in accordance with United Kingdom GAAP translated into
United States dollars. With
22
<PAGE>
respect to the information included in the Unaudited Pro Forma Condensed
Combined Balance Sheet as of September 30, 1999, the Racal Telecom
information is as of October 15, 1999. With respect to the information
included in the Unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1998, the Racal Telecom
information is for the year ended March 31, 1999. With respect to the
information included in the Unaudited Pro Forma Condensed Combined
Statement of Operations for the nine months ended September 30, 1999, the
Racal Telecom information is for the 41 weeks ended October 15, 1999.
(b) Global Crossing is treated as having acquired the business and assets
of Racal Network Services BV as that company was in the process of
being reorganized into Racal Telecommunications Networks Limited in
the course of 1999. These adjustments reflect the financial position
and results of operations of Racal Network Services BV as if this
transaction had been completed as of the dates or at the beginning of
the periods presented.
(c) In July 1999, the Racal Telecom business was separated into three
divisions: Racal Telecom, Racal Translink and Racal Fieldforce. On
October 1, 1999, the Racal Translink and Racal Fieldforce businesses
were sold to another company within the Racal Electronics plc group.
This adjustment eliminates the results of operations of Racal
Translink and Racal Fieldforce, reflects the likely effect of the
trading among Racal Translink, Racal Fieldforce and Racal Telecom
based on contractual obligations among the divisions and adjusts the
profit on disposal of these operations. No taxation liabilities were
incurred on the disposal as this disposal was to another Racal
Electronics plc group company.
(d) The Racal Telecom combined financial statements are prepared in
accordance with United Kingdom GAAP which differ in certain material
respects from United States GAAP. The differences that are material
are disclosed in the notes to the combined financial statements,
incorporated by reference. In addition, an adjustment has been made to
treat sales of dark fiber made by Racal Telecom after July 1, 1999 as
operating leases, recognizing income over the period of the service
provision in accordance with the provision of FASB Interpretation No
43.
(4) These adjustments reflect the elimination of Racal Telecom's shareholders'
equity accounts, the excess consideration over the net assets acquired
(goodwill) and the related amortization expense. The preliminary goodwill
has been calculated as follows (in thousands):
<TABLE>
<S> <C> <C>
Total purchase price........................................ $1,650,000
Global Crossing transaction costs........................... 18,500
----------
Total consideration......................................... 1,668,500
Less: Historical Racal Telecom net assets at October 15,
1999....................................................... 105,643
----------
Preliminary goodwill........................................ $1,562,857
==========
</TABLE>
Global Crossing paid (Pounds)1 billion, approximately $1.65 billion, in
connection with the transaction. Global Crossing partially financed the
acquisition of Racal Telecom through the incurrence of debt in the amount
of (Pounds)675 million, approximately $1.1 billion, with an interest rate
of approximately 9%. In connection with the issuance of this debt, Racal
incurred $29.8 million in financing fees. Global Crossing has tentatively
considered the carrying value of the acquired assets to approximate fair
value, with all excess of those acquisition costs being attributable to
goodwill. Global Crossing is in the process of fully evaluating the assets
to be acquired and, as a result, the purchase price allocation among the
tangible and intangible assets acquired, and their related useful lives,
may change. Global Crossing currently anticipates that goodwill associated
with the transaction will be amortized over a 25-year life.
(5) On January 12, 2000, Global Crossing and Hutchison Whampoa Limited formed
a joint venture called Hutchison Global Crossing. This joint venture is
owned in equal parts by Global Crossing and Hutchison. In exchange for its
50% interest, Hutchison contributed to the joint venture its existing
building-to-building fixed-line telecommunications network in Hong Kong
and certain Internet-related assets previously held by Hutchison
Telecommunications Limited. In exchange for Global Crossing's 50%
interest, Global Crossing contributed to the joint venture international
telecommunications capacity rights on its network and know-how related to
Internet data centers valued at $350 million and $50 million in cash. In
addition, Global Crossing issued to Hutchison $400 million aggregate
liquidation preference of its 6 3/8% cumulative convertible preferred
stock, series B, convertible into its common stock. The Hutchison Global
Crossing joint venture is anticipated to be accounted for as an
unconsolidated joint venture under the equity method of accounting.
23
<PAGE>
<TABLE>
<S> <C> <C>
Total Consideration
Cash contributed................................... $ 50,000
6 3/8% Cumulative Convertible Preferred Stock,
Series B.......................................... 400,000
Estimated cost of capacity contributed............. 83,800
Global Crossing transaction costs.................. 5,000
--------
Total consideration.................................. 538,800
Less:Historical net tangible book value of HCL
Holdings:
Historical HCL Holdings net liabilities at
September 30, 1999................................. $(148,395)
Cash contributed................................... 50,000
Cost of capacity contributed....................... 83,800
---------
Adjusted net tangible book value................... (14,595)
50% ownership interest............................. 7,297
---------
(7,298)
--------
Total Goodwill....................................... $546,098
========
</TABLE>
Global Crossing has tentatively considered the carrying value of the
acquired assets to approximate their fair value, with all of the excess of
those acquisition costs being attributable to goodwill. Global Crossing is
in the process of fully evaluating the assets to be acquired and, as a
result, the purchase price allocation among the tangible and intangible
assets acquired and their useful lives may change. Global Crossing
currently anticipates that goodwill associated with the merger will be
amortized over a 25-year life.
These adjustments also include the assumed equity in the results of
operations of Hutchison Global Crossing for the nine months ended September
30, 1999 and the twelve months ended December 31, 1998.
(6) This column represents the historical results of operations for the nine
months ended September 30, 1999 including the results of Global Marine
Systems operations for the three months ended September 30, 1999.
(7) These columns represent the historical results of operations. With
respect to the information included in the Unaudited Pro Forma Condensed
Combined Statement of Operations for the year ended December 31, 1998,
the Global Marine Systems information is for the fiscal year ended March
31, 1999. For the nine months ended September 30, 1999, the results of
operations include Global Marine Systems for the six months ended June
30, 1999.
(8) These adjustments reflect the amortization expense of the excess
consideration over the net assets acquired (goodwill). The preliminary
goodwill has been estimated to be approximately $622 million. Global
Crossing has tentatively considered the carrying value of the acquired
assets to approximate fair value, with all excess of those acquisition
costs being attributable to goodwill. Global Crossing is in the process
of fully evaluating the assets acquired and, as a result, the purchase
price allocation among the tangible and intangible assets acquired and
their useful lives may change. Global Crossing currently anticipates that
goodwill associated with the transaction will be amortized over a 25-year
life. Based upon a preliminary valuation, Global Crossing estimates that
the purchase price allocation among the tangible and intangible assets
will result in a composite useful life of approximately 22 years.
(9) This amount reflects the assumed interest expense, at an 8% interest
rate, incurred on the $600 million debt assumed issued as of the earliest
date presented in connection with the acquisition of Global Marine
Systems.
(10) These adjustments represent the tax benefit resulting from the interest
expense assumed in connection with the debt issued for the acquisition of
Global Marine Systems.
(11) These adjustments assume Frontier's stock related expenses would not have
been incurred had the merger occurred at the earliest date presented.
(12) These adjustments reflect the amortization expense of the excess
consideration over the net assets acquired (goodwill). The preliminary
goodwill has been estimated to be approximately $7.8 billion.
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Global Crossing has tentatively considered the carrying value of the
acquired assets to approximate their fair value, with all of the excess of
those acquisition costs being attributable to goodwill. Global Crossing is
in the process of fully evaluating the assets to be acquired and, as a
result, the purchase price allocation among the tangible and intangible
assets acquired and their related useful lives may change. Global Crossing
currently anticipates that goodwill associated with the merger will be
amortized over a 25-year life. Based upon a preliminary valuation, Global
Crossing estimates that the purchase price allocation among the tangible
and intangible assets will result in a composite useful life of
approximately 20 years.
(13) This adjustment assumes that Frontier's preferred stock dividends would
not have been incurred, as Frontier's preferred stock would have been
redeemed as of the earliest date presented.
(14) These adjustments represent the redemption of Frontier's 5.00%, second
5.00%, 5.65%, 4.60% and the Ausable 5 1/2% Series redeemable preferred
stock before completion of the merger at their respective premiums of the
total amount outstanding. The preferred stock was redeemed on July 1,
1999.
(15) To eliminate diluted earnings adjustment due to the combined net loss
position.
(16) These adjustments reflect (1) the reversal of historical interest expense
incurred on debt replaced by the senior credit facility and the 9 1/8%
senior notes due 2006 and the 9 1/2% senior notes due 2009; (2) the
reversal of the pro forma interest expense and related tax benefit
incurred on the $600 million debt assumed issued in connection with the
acquisition of Global Marine Systems; and (3) the assumed interest
expense incurred on the 9 1/8% senior notes due 2006 and the 9 1/2%
senior notes due 2009 and the senior credit facility, including the
amortization of deferred financing fees each assumed issued at the
earliest date presented.
(17) These adjustments represent the assumed preferred stock dividends
incurred relating to the 6 3/8% cumulative convertible preferred stock
and 7% cumulative convertible preferred stock of Global Crossing assumed
issued as of the earliest date presented.
(18) This amount reflects the assumed interest expense, at a 9% interest rate,
including the amortization of deferred financing fees incurred on the
$1.1 billion debt assumed issued as of the earliest date presented in
connection with the acquisition of Racal Telecom.
(19) These adjustments represent the tax benefit resulting from the interest
expense assumed in connection with the debt issued for the acquisition of
Racal Telecom.
(20) Pro forma per share data are based on the number of Global Crossing
common shares that would have been outstanding had the merger occurred at
the earliest date presented. Global Crossing issued 355,181,000 shares in
connection with the Frontier merger.
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RISK FACTORS
Before investing in our shares of preferred stock or common stock, you
should carefully consider the risks described below and the other information
included or incorporated by reference in this prospectus.
Risk Factors Relating to the Preferred Stock
The preferred stock is subordinated to all our existing indebtedness and will
not limit our ability to incur future indebtedness that will rank senior to
the preferred stock.
The preferred stock will be subordinated to all our indebtedness with
respect to the payments of interest and amounts distributable upon our
dissolution, liquidation or winding up. The terms of the preferred stock will
not limit the amount of indebtedness or other obligations that we may incur.
Further, we may incur additional indebtedness in order to finance the
construction or acquisition of additional fiber optic and telecommunications
systems and equipment. That indebtedness will rank senior to the preferred
stock.
The preferred stock is structurally subordinated to the obligations of our
subsidiaries.
Because we are a holding company and our assets consist primarily of our
equity interests in our operating subsidiaries, our obligations on the
preferred stock will be structurally subordinated to all liabilities of our
operating subsidiaries. At September 30, 1999, we and our operating
subsidiaries had approximately $5,576 million principal amount of long-term
indebtedness, of which $603 million would have been secured, and approximately
$1,826 million of current liabilities and vendor financing ranking senior to
our equity interests in our operating subsidiaries, after giving pro forma
effect to (1) the offering of the 9 1/8% senior notes due 2006 and the 9 1/2%
senior notes due 2009 of Global Crossing Holdings and the application of the
proceeds from that offering and (2) the Racal Telecom acquisition and the
related issuance of $1.1 billion of long-term indebtedness.
We cannot assure you that, in the event of our dissolution, liquidation,
reorganization or winding up, you will receive any portion of your initial
investment.
We are currently restricted from paying cash dividends and from redeeming the
shares of preferred stock. We also could be prevented in some circumstances
from paying dividends in shares of our common stock.
The terms of the instruments governing our indebtedness and an outstanding
series of preferred stock of Global Crossing Holdings restrict our ability to
pay cash dividends and to redeem our shares of preferred stock. Our ability to
pay cash dividends and redeem our shares of preferred stock will depend on our
meeting certain financial criteria, which in turn will require significant
improvements in our EBITDA and consolidated net worth. Even if the terms of
the instruments governing our indebtedness and preferred stock of Global
Crossing Holdings allow us to pay cash dividends and to redeem our shares of
preferred stock, we can make those payments only from our "surplus", that is
the excess of our total assets over the sum of our liabilities plus the par
value of our outstanding capital stock and any share premium attributable to
our outstanding capital stock. In addition, we can make cash dividends only if
we would, after paying those dividends, be able to pay our liabilities as they
become due. We cannot assure you that we will have any surplus. The same test
applies before we can pay dividends in shares of our common stock.
Our ability to issue senior preferred stock in the future could adversely
affect the rights of holders of preferred stock and our common stock.
We are authorized to issue additional preferred stock in one or more series
on terms that may be determined at the time of issuance by our board of
directors. In some instances, a series of preferred stock could include voting
rights, preferences as to dividends and liquidation, conversion and redemption
rights that will rank senior to the preferred stock, and in all instances,
senior to our common stock. The future issuance of
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preferred stock could effectively diminish or supersede the dividends and
liquidation preferences of the preferred stock and adversely affect our common
stock.
We cannot assure you that an active trading market will develop for the
preferred stock.
There is no market for the preferred stock. In addition, the liquidity of
any trading market in the preferred stock, and the market price quoted for
shares of preferred stock, may be adversely affected by changes in the overall
market for convertible securities and by changes in our financial performance
or prospects or in the prospects of companies in our industry generally. As a
result, we cannot assure you that an active trading market will develop for the
preferred stock, or, if one develops, that the shares of preferred stock will
trade at prices higher than the initial offering price.
We may not have sufficient funds to purchase any shares of preferred stock
upon a change in control.
If we become subject to a change in control, each holder of shares of
preferred stock will have the right to require us to purchase all or any part
of that holder's shares of preferred stock at a purchase price in cash equal to
100% of the liquidation preference of those shares, plus all accumulated and
unpaid dividends on those shares to the date of purchase.
This right of holders is subject to the obligation of Global Crossing
Holdings to (a) repay its debt obligations in full under its corporate credit
facility and (b) purchase all of its senior notes and outstanding shares of
preferred stock that have been tendered for purchase in connection with a
change in control of Global Crossing. In addition, this right of holders is
subject to the repurchase or repayment of our future indebtedness which we are
required to repurchase or repay in connection with a change in control.
If Global Crossing Holdings is unable to satisfy the obligations described
in the paragraph above, we can either purchase shares of preferred stock that
have been tendered to us upon a change in control of Global Crossing in
violation of our debt agreements and covenants in connection with the senior
notes and preferred stock of Global Crossing Holdings or choose not to purchase
any shares of preferred stock. We cannot assure you that Global Crossing
Holdings will have sufficient funds available at the time of a change in
control to meet those obligations.
A change in control of Global Crossing may also be an event of default under
our other debt agreements and require repayment of that debt in whole or in
part as a result of acceleration or otherwise. In that circumstance, we may not
have access to sufficient cash to purchase shares of preferred stock tendered
to us upon a change in control.
Risk Factors Relating to Our Common Stock
We do not plan on paying dividends in the foreseeable future and, as a result,
shareholders will need to sell shares to realize a return on their investment.
We have not declared or paid any cash dividends on our common stock since
our inception. We do not anticipate paying cash dividends on our common stock
in the foreseeable future. Our ability to pay dividends is limited by some of
our debt instruments. Consequently, shareholders will need to sell shares of
our common stock to realize a return on their investment, if any.
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Our stock performance may be volatile.
Historically, the market prices for securities of emerging companies in the
telecommunications industry have been highly volatile. A number of factors
could cause the market price of our common stock to fluctuate substantially
including:
. quarterly variations in operating results;
. competition;
. announcements of technological innovations or new products by us or our
competitors;
. product enhancements by us or our competitors;
. regulatory changes;
. any differences in actual results and results expected by investors and
analysts;
. changes in financial estimates by securities analysts; and
. other events or factors.
In addition, the stock market has experienced volatility that has affected
the market prices of equity securities of many companies, and that often has
been unrelated to the operating performance of these companies. These broad
market fluctuations may adversely affect the market price of our common stock.
The sale of a substantial number of shares of our common stock in the public
market could adversely affect the market price of our common stock.
A substantial number of our shares of common stock are eligible for sale
under an exemption from the registration requirements or are subject to
registration rights pursuant to which holders may require us to register those
shares in the future. Sales or the expectation of sales of a substantial number
of shares of our common stock in the public market could adversely affect the
prevailing market price of our common stock.
Our large shareholders face voting and transfer restrictions that could
deprive shareholders of opportunities to realize takeover premiums for their
shares or affect our stock price.
The voting and transfer restrictions described in the next two paragraphs
could make it difficult for any person or group of persons acting in concert,
other than some existing shareholders, to acquire a substantial ownership
position in, or control of, us. To the extent that these provisions discourage
takeover attempts, they could deprive shareholders of opportunities to realize
takeover premiums for their shares or could depress the trading price of our
common stock.
Voting restrictions. Our bye-laws provide that each share of our common
stock will have one vote. However, if the shares controlled by any person
constitute more than 9.5% or, in the case of Canadian Imperial Bank of Commerce
and its affiliates, more than 20% of the total votes cast at a shareholder
meeting in connection with any matter on which our shareholders are voting, the
voting rights of that shareholder's shares will be limited to 9.5%, or 20% in
the case of Canadian Imperial Bank of Commerce and its affiliates, of the total
votes cast in connection with that matter. The additional votes of those shares
will be allocated to the other holders of common stock on a pro rata basis. The
other holders who were allocated these additional votes may not exceed the
above limitation as a result of this allocation.
Transfer restrictions. The bye-laws also prohibit any transfer of shares of
common stock that, subject to specified exceptions, would result in a natural
person beneficially owning shares in excess of 5% of the outstanding shares of
common stock or a group of persons or any person other than a natural person
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beneficially owning shares in excess of 9.5% of the outstanding shares of
common stock, without the approval of a majority of the members of the board
of directors and shareholders holding at least a majority of the total votes
cast at the shareholder meeting called to approve that transfer.
Risk Factors Relating to Our Business
You should consider carefully the risk factors described below and in all
the documents that we incorporate by reference in this prospectus and are
listed under "Incorporation by Reference" on page ii. In particular, you
should consider carefully the risk factors described on pages 20-21 of Item I
of Frontier's annual report on Form 10-K for the year ended December 31, 1998.
We cannot assure you of the successful integration of the business of
Frontier, Racal Telecom or other newly acquired businesses. We cannot assure
you that the expected benefits will be achieved.
Achieving the benefits of our acquisition of Frontier, Racal Telecom or any
other businesses will depend in part on the integration of those businesses
with our business in an efficient manner. We cannot assure you that this will
happen or that it will happen in a timely manner. We have not previously had
significant experience integrating the operations of acquired companies. The
consolidation of operations will require substantial attention from
management. The diversion of management attention and any difficulties
encountered in the transition and integration process could have a material
adverse effect on the revenues, levels of expenses and operating results of
the combined company. We cannot assure you that the combined company will
realize any of the anticipated benefits of any such acquisition.
It may be difficult to evaluate our business because we have a limited
operating history.
We were organized in March 1997 and, with the exception of our Frontier,
Global Marine and Racal Telecom subsidiaries, have a limited operating
history. Our financial information relates principally to a period in which we
were constructing and developing the Atlantic Crossing system and, until May
1998, had minimal revenues and operating costs. Despite recognizing
approximately $1,048 million in revenues, we have incurred a net loss
applicable to common shareholders of approximately $59.8 million for the
period from March 19, 1997, our date of inception, through September 30, 1999,
due primarily to the termination of some advisory services agreements, the
incurrence of stock-related expense, the extraordinary loss on the retirement
of some senior notes, preferred stock dividends and the redemption of some
preferred stock, as partially offset by the U S WEST termination fee. We have
financed our net losses, debt service, capital expenditures and other cash
needs to date through operations, the proceeds of sales of common stock,
mandatorily redeemable preferred stock and cumulative convertible preferred
stock and the issuance of debt. We will require substantial additional capital
in order to carry out our business plan.
We have substantial leverage which may limit our ability to comply with the
terms of our indebtedness and may restrict our ability to operate.
Our significant indebtedness could adversely affect us by leaving us with
insufficient cash to fund operations and impairing our ability to obtain
additional financing. The amount of our debt could have important consequences
for our future, including, among other things:
. cash from operations may be insufficient to meet the principal and
interest on our indebtedness as it becomes due;
. payments of principal and interest on borrowings may leave us with
insufficient cash resources for our operations; and
. restrictive debt covenants may impair our ability to obtain additional
financing.
We have incurred a high level of debt. As of September 30, 1999, on a pro
forma basis giving effect to (1) the offering of the 9 1/8% senior notes due
2006 and the 9 1/2% senior notes due 2009 of Global Crossing
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Holdings and the application of the proceeds from that offering and (2) the
Racal Telecom acquisition and the related issuance of $1.1 billion of long-term
indebtedness, we and our consolidated subsidiaries had a total of $7,848
million of total liabilities, including approximately $5,474 million in senior
indebtedness, of which $603 million was secured. Global Crossing Holdings also
has mandatorily redeemable preferred stock outstanding with a face value of
$500 million. In addition, our Pacific Crossing joint venture entered into an
$850 million non-recourse credit facility, under which it had incurred $657
million of indebtedness as of September 30, 1999.
Our ability to repay our debt depends upon a number of factors, many of
which are beyond our control. In addition, we rely on dividends, loan
repayments and other intercompany cash flows from our subsidiaries to repay our
obligations. Our operating subsidiaries have entered into a senior secured
corporate credit facility. Accordingly, the payment of dividends from these
operating subsidiaries and the making and repayments of loans and advances are
subject to statutory, contractual and other restrictions.
In addition, if we are unable to generate sufficient cash flow to meet our
debt service requirements, we may have to renegotiate the terms of our long-
term debt. We cannot assure you that we would be able to renegotiate
successfully those terms or refinance our indebtedness when required or that
satisfactory terms of any refinancing would be available. If we were not able
to refinance our indebtedness or obtain new financing under these
circumstances, we would have to consider other options, such as:
. sales of some assets to meet our debt service obligations;
. sales of equity;
. negotiations with our lenders to restructure applicable indebtedness; or
. other options available to us under applicable law.
We may encounter difficulties in completing our cable systems.
We may encounter difficulties in completing our cable systems. Our ability
to achieve our strategic objectives will depend in large part upon the
successful, timely and cost-effective completion of our planned cable systems
as well as on achieving substantial capacity sales on these systems once they
become operational. The construction of our systems will be affected by a
variety of factors, uncertainties and contingencies, many of which are beyond
our control including:
. our ability to manage their construction effectively;
. our ability to obtain all construction and operating permits and
licenses;
. third-party contractors performing their obligations on schedule; and
. our ability to enter into favorable construction contracts with a
limited number of suppliers.
These factors may significantly delay or prevent completion of one or more
of our systems, which could have a material adverse effect on our business,
financial condition and results of operations.
We cannot assure you that each of our systems will be completed at the cost
and in the time frame currently estimated by us, or even at all. Although we
award contracts for construction of our systems to suppliers who in most cases
are expected to be bound by a fixed-price construction cost schedule and to
provide guarantees in respect of completion dates and system design
specifications, we cannot assure you that the actual construction costs or the
time required to complete these systems will not exceed our current estimates.
These circumstances could have a material adverse effect on our results of
operations or financial condition.
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We depend upon the continued success of our sales and marketing capabilities.
If we are unable to effectively sell capacity on our cable systems, our
results of operations will be materially adversely affected.
Our success will depend substantially on sales of capacity on our systems.
Although our sales and marketing efforts have resulted to date in substantial
sales of undersea and terrestrial capacity on our systems, we cannot be certain
that we will continue to be successful in selling capacity or that we will be
able to realize our business plan. Furthermore, even if we realize our plan, we
still may not be able to sustain operating profitability or generate sufficient
cash flow to service our indebtedness.
If we are unable to effectively sell capacity on our cable systems, our
results of operations will be materially adversely affected. Our ability to
achieve our business objectives depends in large part upon our sales and
marketing capabilities. We have assembled a dedicated sales and marketing
force. We depend upon the ability of these employees to effectively market and
sell capacity. We cannot be certain that we will be able to effectively sell
capacity on our cable systems.
Our revenue growth plan depends on product and service expansion.
We intend to grow revenues and profits by:
. upgrading capacity on our planned systems;
. developing additional undersea cable projects;
. developing or purchasing additional terrestrial fiber capacity; and
. introducing new services.
If we are unable to effect these upgrades, develop additional cable
projects, develop or obtain additional terrestrial capacity or introduce new
services, our business, financial condition and results of operations could be
adversely affected.
Some of our capacity purchase contracts require us to obtain governmental
permits. If we fail to obtain those permits, these capacity purchase contracts
may be terminated.
Some of our capacity purchase contracts are terminable under specified
circumstances. Under some capacity purchase agreements for the Atlantic
Crossing system, the customer may terminate the agreement if, among other
things, we do not obtain and hold specified governmental authorizations,
approvals, consents, licenses and permits. Purchase agreements for our other
systems may contain similar provisions. If a substantial number of purchase
agreements are terminated for these or other reasons, our business, financial
condition and results of operations could be materially adversely affected.
We face competition along our routes which may reduce demand for our systems.
The international telecommunications industry is highly competitive. We face
competition from existing and planned systems along each of our planned routes.
We also compete with satellite providers, including existing geosynchronous
satellites and low- and medium-earth orbit systems now under construction. We
compete primarily on the basis of price, availability, transmission quality and
reliability, customer service and the location of our systems. Traditionally,
carriers have made substantial long-term investments in ownership of cable
capacity. We cannot assure you that we will be able to compete successfully
against systems to which prospective customers have made long-term commitments.
In addition, much of our planned growth is predicated upon the growth in demand
for international telecommunications capacity. We cannot assure you that this
anticipated demand growth will occur.
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Our principal shareholders may be able to influence materially the outcome of
shareholder votes.
As of December 31, 1999, Pacific Capital Group had an 11.8% beneficial
ownership interest in us. We have entered into various transactions with
Pacific Capital Group and assumed the on-going development of some of its
systems from an affiliate of Pacific Capital Group. Mr. Gary Winnick, chairman
of our board of directors, controls Pacific Capital Group and its subsidiaries.
In addition, several of our other officers and directors are affiliated with
Pacific Capital Group. Furthermore, as of December 31, 1999, Canadian Imperial
Bank of Commerce had a 10.9% beneficial ownership interest in us. Canadian
Imperial Bank of Commerce and its affiliates have acted as underwriter, lender
or initial purchaser in several of our financial transactions in connection
with the development and construction of our systems. Several members of our
board of directors are employees of an affiliate of Canadian Imperial Bank of
Commerce.
As of December 31, 1999, Pacific Capital Group and Canadian Imperial Bank of
Commerce collectively beneficially owned 22.7% of the outstanding shares of our
common stock. Accordingly, Pacific Capital Group and Canadian Imperial Bank of
Commerce may be able to influence materially the outcome of matters submitted
to a vote of our shareholders, including the election of directors.
Officers and directors own a substantial portion of us and may have conflicts
of interest.
Our executive officers and directors have substantial equity interests in
us. As of December 31, 1999, all our directors and executive officers as a
group collectively beneficially owned 40.7% of our outstanding common stock,
including shares beneficially owned by Pacific Capital Group and Canadian
Imperial Bank of Commerce. Some of these individuals have also received amounts
from us due to advisory services fees paid to Pacific Capital Group and its
affiliates.
Some of our directors and executive officers also serve as officers and
directors of other companies. Additionally, some of our officers and directors
are active investors in the telecommunications industry. Service as one of our
directors or officers and as a director or officer of another company could
create conflicts of interest when the director or officer is faced with
decisions that could have different implications for us and the other company.
A conflict of interest could also exist with respect to allocation of time and
attention of persons who are our directors or officers and directors and
officers of another company. The pursuit of these other business interests
could distract these officers from pursuing opportunities on our behalf. These
conflicts of interest could have a material adverse effect on our financial
condition.
We may not be successful in completing the transition to an operating company.
The transition from a development stage company to an operating company
places significant demands on our management and operations. We are in the
process of expanding the management and operational capabilities necessary for
this transition.
Our ability to manage this transition successfully will depend on, among
other things:
. expanding, training and managing our employee base, including
attracting, retaining and motivating highly skilled personnel;
. taking over or outsourcing our customer interface and operations,
administrative and maintenance systems;
. procuring terrestrial capacity to provide connectivity to inland cities;
and
. controlling expenses.
We cannot assure you that we will succeed in developing all or any of these
capabilities, and any failure to do so could have a material adverse effect on
our results of operations. We are growing rapidly in a changing industry. Part
of our strategy is to construct several cable systems in a short time frame in
order to take
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advantage of the supply and demand imbalance that currently exists and is
projected to exist in the global marketplace. We expect each of our currently
announced systems to be operational between now and 2001. As a result of this
aggressive strategy, we are experiencing rapid expansion and expect it to
continue for the foreseeable future. This growth has increased our operating
complexity. At the same time, the international telecommunications industry is
changing rapidly due to, among other things:
. the easing of regulatory constraints;
. the privatization of established carriers;
. the expansion of telecommunications infrastructure;
. the globalization of the world's economies; and
. the changing technology for wired, wireless and satellite communication.
We cannot assure you that we will succeed in adapting to the rapid changes
in the international telecommunications industry.
We face price declines that could adversely affect our business.
Advances in fiber optic technology have resulted in significant per circuit
price declines in the fiber optic cable transmission industry. Recent changes
in technology caused prices for circuits to go down even further. If there is
less demand than we project or a bigger drop in prices per circuit than we
project, there could be a material adverse effect on our business, financial
condition and results of operations. We cannot assure you, even if our
projections with respect to those factors are realized, that we will be able to
implement our strategy or that our strategy will be successful in the rapidly
evolving telecommunications market.
We confront several system operational risks that could affect our operations.
Each of our systems will be subject to the risks inherent in a large-scale,
complex fiber optic telecommunications system. The operation, administration,
maintenance and repair of these systems requires the coordination and
integration of sophisticated and highly specialized hardware and software
technologies and equipment located throughout the world. We cannot assure you
that, even if built to specifications, our systems will function as expected in
a cost-effective manner. The failure of the hardware or software to function as
required could render a cable system unable to perform at design
specifications.
Each of our systems either has or is expected to have a design life of
generally 25 years; however, we cannot assure you of the actual useful life of
any of these systems. A number of factors will affect the useful life of each
of our systems, including, among other things:
. quality of construction;
. unexpected damage or deterioration; and
. technological or economic obsolescence.
Failure of any of our systems to operate for its full design life could have
a material adverse effect on our business, financial condition and results of
operations.
Our success depends on our ability to maintain, hire and successfully
integrate key personnel.
Our future success depends on the skills, experience and efforts of our
officers and key technical and sales employees. In particular, our senior
management has significant experience in the telecommunications and Internet
industries, and the loss of any of them could negatively affect our ability to
execute our business strategy. In addition, we cannot assure you that we will
be able to integrate new management into our existing
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operations. Competition for these individuals is intense, and we may not be
able to attract, motivate and retain highly skilled qualified personnel. We do
not have "key person" life insurance policies covering any of our employees.
We face risks associated with international operations.
Because we will derive substantial revenues from international operations
and intend to have substantial physical assets in several jurisdictions along
the routes of our planned systems, our business is subject to risks inherent in
international operations, including:
. political and economic conditions;
. unexpected changes in regulatory environments;
. exposure to different legal standards; and
. difficulties in staffing and managing operations.
We have not experienced any material adverse effects with respect to our
foreign operations arising from these factors. However, problems associated
with these risks could arise in the future. Finally, managing operations in
multiple jurisdictions may place further strain on our ability to manage our
overall growth.
We depend on a number of governmental licenses and permits. If we fail to
obtain or maintain those licenses and permits, we may not be able to conduct
our business.
We will, in the ordinary course of development, construction and operation
of our fiber optic cable systems, be required to obtain and maintain various
permits, licenses and other authorizations in both the United States and in
international jurisdictions where our cables land and exist.
. Undersea cable landing or similar licenses will be required in many of
the jurisdictions where our systems will land and exist. These licenses
are typically issued for a term of years, subject to renewal. Moreover,
the licenses may subject our business and operations to varying forms of
regulation, which could change over time. If we fail to obtain or renew
a license or if there is a material change in the nature of the
regulation to which we are subject, there could be a material adverse
effect on our business, financial condition and results of operations.
. We must obtain construction and operating licenses during the
construction phase of each of our cable systems. Although we intend that
the construction contracts for each of our undersea cable systems impose
the burden of acquiring and maintaining construction licenses and
permits on the contractor for each of these systems, we cannot assure
you that the contractors will successfully obtain all permits and
licenses. If we or any contractor fail to obtain or maintain any
construction or operating permit or license, there could be a material
adverse effect on our business, financial condition and results of
operations.
We depend on third parties for many functions. If the services of those third
parties are not available to us, we may not be able to conduct our business.
We depend and will continue to depend upon third parties to:
. construct some of our systems and provide equipment and maintenance;
. provide access to a number of origination and termination points of our
systems in various jurisdictions;
. construct and operate landing stations in a number of those
jurisdictions;
. acquire rights of way;
. provide terrestrial capacity to our customers through contractual
arrangements; and
. act as joint venture participants with regard to some of our current and
potential future systems.
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We cannot assure you that third parties will perform their contractual
obligations or that they will not be subject to political or economic events
which may have a material adverse effect on our business, financial condition
and results of operations. If they fail to perform their obligations, we may
not be able to conduct our business.
We cannot predict our future tax liabilities.
We believe that a significant portion of the income derived from our
undersea systems will not be subject to tax by any of (1) Bermuda, which
currently does not have a corporate income tax, or (2) some other countries in
which we conduct activities or in which our customers are located. However, we
base this belief upon:
. the anticipated nature and conduct of our business, which may change;
and
. our understanding of our position under the tax laws of the various
countries in which we have assets or conduct activities, which position
is subject to review and possible challenge by taxing authorities and to
possible changes in law, which may have retroactive effect.
We cannot predict the amount of tax to which we may become subject and
cannot be certain that any of these factors would not have a material adverse
effect on our business, financial condition and results of operations.
Our shareholders may be subject to Foreign Personal Holding Company, Passive
Foreign Investment Company, Controlled Foreign Corporation and Personal
Holding Company rules.
We believe that neither we nor any of our non-United States subsidiaries are
a foreign personal holding company and do not expect that either we or any of
our affiliates will become a foreign personal holding company. However, we
cannot assure you in this regard. If one of our shareholders is a United States
person and we or one of our non-United States subsidiaries are classified as a
foreign personal holding company, then that shareholder would be required to
pay tax on its pro rata share of our or our relevant non-United States
subsidiary's undistributed foreign personal holding income. We intend to manage
our affairs so as to attempt to avoid or minimize having income imputed to
United States persons under these rules, to the extent this management of our
affairs would be consistent with our business goals, although we cannot assure
you in this regard.
We believe that we are not a passive foreign investment company and do not
expect to become a passive foreign investment company in the future. However,
we cannot assure you in this regard. In addition, this belief is based, in
part, on interpretations of existing law that we believe are reasonable, but
which have not been approved by any taxing authority. If we were a passive
foreign investment company, then any of our shareholders that is a United
States person could be liable to pay tax at the then prevailing rates on
ordinary income plus an interest charge upon some distributions by us or when
that shareholder sold our capital stock at a gain.
Furthermore, additional tax considerations would apply if we or any of our
affiliates were a controlled foreign corporation or a personal holding company.
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<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
We have included or incorporated by reference in this prospectus forward-
looking statements that state our own or our management's intentions, beliefs,
expectations or predictions for the future. Forward-looking statements are
subject to a number of risks, assumptions and uncertainties which could cause
our actual results to differ materially from those projected in the forward-
looking statements. These risks, assumptions and uncertainties include:
. the ability to complete systems within the currently estimated time
frames and budgets;
. the ability to compete effectively in a rapidly evolving and price
competitive marketplace;
. changes in the nature of telecommunications regulation in the United
States and other countries;
. changes in business strategy;
. the successful integration of newly acquired businesses;
. the impact of technological change; and
. other risks referenced from time to time in our filings with the SEC.
USE OF PROCEEDS
We will not receive any proceeds from sales of securities under this
prospectus.
36
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
The following table presents our historical ratios of earnings to fixed
charges and preferred dividends for the periods indicated:
<TABLE>
<CAPTION>
Period From
Nine Months Ended Year Ended March 19, 1997
September 30, December 31, (Date of Inception)
1999 1998 to December 31, 1997
----------------- ------------ --------------------
<S> <C> <C> <C>
Ratio................ 1.94x -- --
Deficiency........... -- $(95,371) $(12,850)
</TABLE>
For the purposes of this computation, earnings are defined as income (loss)
before income taxes plus fixed charges and preferred dividends. Fixed charges
consist of interest expense, including amortization of deferred debt issuance
costs and the interest portion of capital lease obligations, and the portion of
rental expense that is representative of the interest factor, deemed to be one-
third of minimum operating lease rentals.
PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
We prepared the following table presenting the pro forma ratios of earnings
to fixed charges and preferred dividends to demonstrate how these ratios of
earnings to fixed charges and preferred dividends might have looked if (1) the
Global Marine Systems acquisition and related financing, (2) the Frontier
acquisition, (3) the Racal Telecom acquisition and related financing, (4) the
Hutchison Global Crossing joint venture, including, the related issuance of our
6 3/8% cumulative convertible preferred stock, series B, (5) the offering of
our 6 3/8% cumulative convertible preferred stock completed on November 5,
1999, (6) the offering of the 9 1/8% senior notes due 2006 and 9 1/2% senior
notes due 2009 of Global Crossing Holdings completed on November 19, 1999 and
the application of the net proceeds of that offering and (7) the offering of
our 7% cumulative convertible preferred stock completed on December 15, 1999
had been completed at the beginning of the periods presented.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
1999 1998
----------------- ------------
<S> <C> <C>
Ratio...................................... -- --
Deficiency................................. $(378,153) $(676,349)
</TABLE>
For the purposes of this pro-forma computation, earnings are defined as
income (loss) before income taxes plus fixed charges and preferred dividends.
Fixed charges consist of interest expense, including amortization of deferred
debt issuance costs and the interest portion of capital lease obligations, and
the portion of rental expense that is representative of the interest factor,
deemed to be one-third of minimum operating lease rentals.
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<PAGE>
CAPITALIZATION
The following table presents as of September 30, 1999 (1) our actual
consolidated capitalization and (2) our capitalization as adjusted to reflect
(a) our 6 3/8% cumulative convertible preferred stock issued on November 5,
1999, (b) the offering of the 9 1/8% senior notes due 2006 and 9 1/2% senior
notes due 2009 of Global Crossing Holdings and the application of the net
proceeds from that offering, (c) our 7% cumulative convertible preferred stock
issued on December 15, 1999, (d) our 6 3/8% cumulative convertible preferred
stock, series B, which we issued to Hutchison upon completion of the Hutchison
Global Crossing joint venture and (e) the $1.1 billion of long-term
indebtedness issued in connection with the acquisition of Racal Telecom.
You should read this table in conjunction with the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements and the accompanying notes incorporated by
reference in this prospectus.
<TABLE>
<CAPTION>
As of September 30,
1999
------------------------
Actual As Adjusted
----------- -----------
(in thousands)
<S> <C> <C>
Long-Term Debt:
Senior secured corporate credit facility(1)..... $ 2,083,598 $ 603,000
9 5/8% Senior Notes due 2008.................... 765,342 765,342
9 1/8% Senior Notes due 2006.................... -- 900,000
9 1/2% Senior Notes due 2009.................... -- 1,100,000
Other long-term debt............................ 1,005,315 2,105,315
----------- -----------
Total long-term debt.......................... 3,854,255 5,473,657
----------- -----------
Mandatorily redeemable preferred stock............ 485,647 485,647
----------- -----------
Shareholders' Equity:
6 3/8% Cumulative Convertible Preferred Stock... -- 1,369,000
7% Cumulative Convertible Preferred Stock....... -- 629,750
Common Stock.................................... 7,899 7,899
Treasury Stock.................................. (209,415) (209,415)
Other Shareholders' Equity...................... 9,393,120 9,393,120
Retained Earnings............................... 40,997 10,182
----------- -----------
Total Shareholders' Equity.................... 9,232,601 11,200,536
----------- -----------
Total Capitalization.......................... $13,572,503 $17,159,840
=========== ===========
</TABLE>
- --------
(1) The senior secured corporate credit facility as adjusted for the use of
proceeds of the offering of the 9 1/8% senior notes due 2006 and 9 1/2%
senior notes due 2009 of Global Crossing Holdings consists of a $1.0
billion revolving credit facility.
DIVIDEND POLICY
We do not anticipate paying dividends on our common stock in the foreseeable
future. The terms of some of our debt instruments place limitations on our
ability to pay dividends. Future dividends on our common stock, if any, will be
at the discretion of our board of directors and will depend on, among other
things, our operations, capital requirements and surplus, general financial
condition, contractual restrictions and such other factors as our board of
directors may deem relevant.
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<PAGE>
DILUTION
Our net tangible book value at September 30, 1999 was approximately $793
million or $1.03 per share of common stock. Net tangible book value per share
represents the amount of our tangible assets, meaning (1) total assets less
intangible assets, (2) reduced by our total liabilities and our mandatorily
redeemable preferred stock and (3) divided by the number of shares of common
stock outstanding.
After giving effect to 13,006,480 shares of our common stock covered by this
prospectus at the conversion price of $53.25 per share, our adjusted net
tangible book value as of September 30, 1999 would have been appropriately
$1,485 million or $1.90 per share. This represents an immediate increase in net
tangible book value of $0.87 per share to existing shareholders and an
immediate dilution of $51.35 per share to new investors purchasing shares of
our common stock under this prospectus. The following table illustrates this
per share dilution:
<TABLE>
<S> <C> <C>
Conversion price per share................................. $53.25
Net tangible book value per share before the
conversions............................................. $1.03
Increase per share attributable to conversions under this
prospectus.............................................. $0.87
-----
Adjusted net tangible book value per share after the
conversions............................................... $ 1.90
------
Dilution per share to new investors........................ $51.35
======
</TABLE>
39
<PAGE>
DESCRIPTION OF THE PREFERRED STOCK
The following section describes all the material terms of the preferred
stock, but does not purport to be complete and is subject to and qualified in
its entirety by reference to the certificate of designations relating to the
preferred stock. We have filed the certificate of designations as an exhibit to
the registration statement of which this prospectus is a part. You may also
obtain a copy of the certificate of designations by contacting us at the
address provided under "Where You Can Find More Information" on page ii.
General
As of January 14, 2000, there were 2,600,000 shares of our 7% cumulative
convertible preferred stock, $0.01 par value per share and $250.00 liquidation
preference per share, outstanding. The shares of preferred stock are validly
issued, fully paid and nonassessable.
The holders of the shares of preferred stock have no preemptive or
preferential rights to purchase or subscribe to stock, obligations, warrants or
any other of our securities.
Ranking
The preferred stock ranks, with respect to dividend rights and upon
liquidation, winding up and dissolution:
. junior to all our existing and future debt obligations;
. junior to "senior stock", which is each other class or series of
our capital stock other than (a) our common stock and any other
class or series of our capital stock the terms of which provide
that that class or series will rank junior to the preferred stock
and (b) any other class or series of our capital stock the terms
of which provide that that class or series will rank on a parity
with the preferred stock;
. on a parity with "parity stock", which is our 6 3/8% cumulative
convertible preferred stock and each other class or series of our
capital stock that has terms which provide that that class or
series will rank on a parity with the preferred stock;
. senior to "junior stock", which is our common stock and each class
or series of our capital stock that has terms which provide that
that class or series will rank junior to the preferred stock.
The terms "senior stock", "parity stock" and "junior stock" include
warrants, rights, calls or options exercisable for or convertible into that
type of stock.
Dividends
The holders of the shares of preferred stock are entitled to receive, when,
as and if declared by our board of directors out of funds legally available for
payment, cumulative dividends per share at the annual rate of 7% of the $250.00
liquidation preference per share of preferred stock. The dividend rate is
equivalent to $17.50 per share annually. The right of the holders of the shares
of preferred stock to receive dividend payments is subject to the rights of any
holders of shares of senior stock and parity stock.
Dividends are payable in equal amounts on February 1, May 1, August 1 and
November 1 of each year, beginning on February 1, 2000. If any of those dates
is not a business day, then dividends will be payable on the next succeeding
business day. Dividends will accrue from the most recent date as to which
dividends will have been paid or, if no dividends have been paid, from the date
of the original issuance of the shares of preferred stock. The first dividend
period began on December 15, 1999 and will be shorter than a full quarter.
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<PAGE>
Dividends will be payable to holders of record as they appear in our stock
records at the close of business on January 15, April 15, July 15 and October
15 of each year or on a record date which will be fixed by our board of
directors and which will be not more than 60 days and not less than 10 days
before the applicable quarterly dividend payment date. Dividends will be
cumulative from each quarterly dividend payment date, whether or not we will
have funds legally available for the payment of those dividends. Accumulations
of dividends on shares of preferred stock will not bear interest. Dividends
payable on the shares of preferred stock for any period shorter than a full
quarterly period will be computed on the basis of a 360-day year consisting of
twelve 30-day months.
Dividends on the shares of preferred stock will be payable in cash. We will
have the option to pay all or any part of a dividend by delivering shares of
our common stock to the transfer agent. In this case, we must deliver to the
transfer agent a number of shares of our common stock which, when resold by the
transfer agent, will result in net cash proceeds sufficient to pay the
applicable dividend in cash to the holders of the shares of preferred stock.
The holders of shares of preferred stock will not receive any shares of our
common stock as dividend. If the proceeds of any resale of shares of our common
stock do not result in sufficient cash proceeds to pay a dividend, we will
promptly provide cash to the transfer agent in an amount equal to the
difference between the amount of the dividend and the proceeds of that resale.
All shares of common stock that we may deliver to the transfer agent as
provided in this paragraph for the payment of dividends will be registered
under the Securities Act.
We will not (1) declare or pay any dividend on or (2) set apart any sum for
the payment of dividends on any outstanding shares of preferred stock with
respect to any dividend period unless we have declared and paid or have
declared and set apart a sufficient sum for the payment of all dividends on all
outstanding shares of this issue of preferred stock for all preceding dividend
periods.
We will not (1) declare, pay or set apart funds for the payment of any
dividend or other distribution with respect to any junior stock or parity stock
or (2) redeem, purchase or otherwise acquire for consideration junior stock or
parity stock through a sinking fund or otherwise, unless we have paid or set
apart funds for the payment of all accrued and unpaid dividends with respect to
the shares of this issue of preferred stock and any parity stock at the time
those dividends are payable. As an exception to clause (1) of this paragraph,
we will be able to (a) declare and pay dividends on junior stock or parity
stock which are payable solely in shares of parity stock or junior stock, in
the case of parity stock, or junior stock, in the case of junior stock, or by
the increase in the liquidation value of junior stock or parity stock and (b)
redeem, purchase or otherwise acquire junior stock or parity stock in exchange
for consideration consisting of parity stock or junior stock, in the case of
parity stock, or junior stock, in the case of junior stock.
41
<PAGE>
Redemption
Optional Redemption
Except as provided below under "--Tax Redemption", we may not redeem any
shares of preferred stock before December 15, 2004. After that date, we will
have the option to redeem for cash any or all shares of preferred stock, at any
time or from time to time, upon not less than 30 nor more than 60 days' prior
notice sent by first class mail to each holder's registered address, at the
following redemption prices, expressed as a percentage of the liquidation
preference per share, plus accumulated and unpaid dividends to the date of
redemption, beginning on December 15 of each of the following years:
<TABLE>
<CAPTION>
Redemption
Period Price
------ ----------
<S> <C>
2004.......................................................... 103.5%
2005.......................................................... 102.8%
2006.......................................................... 102.1%
2007.......................................................... 101.4%
2008.......................................................... 100.7%
2009 and thereafter........................................... 100.0%
</TABLE>
Tax Redemption
For purposes of this section, "additional amounts" means amounts that we
must pay to the holders of the shares of preferred stock as additional
dividends, to make up for any deduction or withholding for any present or
future taxes, assessments or other governmental charges imposed by any
jurisdiction, political subdivision or taxing authority described in the second
sentence of the fourth paragraph of this section in respect of any amounts that
we or a successor corporation must pay with respect to the shares of preferred
stock, so that the net amounts paid to the holders of the shares of preferred
stock, after that deduction or withholding, will be not less than the amount
specified in those shares. However, we will not be obligated to pay additional
amounts to any holder that:
. resides in or is a citizen of the jurisdiction, political
subdivision or taxing authority imposing the taxes, assessments or
other governmental charges that would otherwise trigger our
obligation to pay additional amounts; or
. is a fiduciary, partnership or limited liability company if, and
to the extent that, the payment of additional amounts would be
required by a jurisdiction, political subdivision or taxing
authority described in the second sentence of the fourth paragraph
of this section to be included in the income for tax purposes of a
beneficiary or settlor with respect to that fiduciary or a member
of that partnership or limited liability company who would not
have been entitled to any additional amounts had that beneficiary,
settlor or member held those shares of preferred stock directly.
In addition, we will not be obligated to pay any additional amounts to a
holder on account of:
. any tax, assessment or other governmental charge that would not
have been imposed but for (a) the existence of any present or
former connection between the holder, or certain other persons,
and the taxing jurisdiction or political subdivision, (b) the
presentation of shares of preferred stock for payment after a
specified time period or (c) the presentation of shares of
preferred stock for payment in Bermuda or any political
subdivision of or in Bermuda, unless those shares could not have
been presented for payment elsewhere;
. any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
42
<PAGE>
. any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payment of the liquidation
preference of or any dividends on the shares of preferred stock;
. any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure by the holder or the
beneficial owner of the shares of preferred stock to comply with a
request by us to (a) provide information, documents or other
evidence concerning the nationality, residence or identity of the
holder or beneficial owner or (b) make and deliver any declaration
or other similar claim, other than a claim for refund of a tax,
assessment or other governmental charge withheld by us, or satisfy
any information or reporting requirements, which, in the case of
clauses (a) or (b), is required or imposed by a statute, treaty,
regulation or administrative practice of the taxing jurisdiction
as a precondition to exemption from all or part of that tax,
assesment or other governmental charge; or
. any combination of the items identified by bullet points above.
We will have the option to redeem for cash any or all shares of preferred
stock at any time or from time to time, upon not less than 30 nor more than 60
days' prior notice sent by first-class mail to each holder's registered
address, at 100% of the liquidation preference per share plus accumulated and
unpaid dividends to the date of redemption, if there is a "change in tax law"
that would require us or any successor corporation to pay additional amounts
with respect to the shares of preferred stock on the next succeeding dividend
payment date, and the payment of those additional amounts cannot be avoided by
the use of any reasonable measures available to us or any successor
corporation.
A "change in tax law" that would trigger the provisions of the preceding
paragraph would be (a) a change in or amendment to laws, regulations or rulings
of any jurisdiction, political subdivision or taxing authority described in the
next sentence, (b) a change in the official application or interpretation of
those laws, regulations or rulings or (c) any execution of or amendment to any
treaty affecting taxation to which any jurisdiction, political subdivision or
taxing authority described in the next sentence is party. The jurisdictions,
political subdivisions and taxing authorities referred to in the previous
sentence are (a) Bermuda or any political subdivision or governmental authority
of or in Bermuda with the power to tax, (b) any jurisdiction, other than the
United States, from or through which we or our paying agent is making payments
on the shares of preferred stock or any political subdivision or governmental
authority of or in that jurisdiction with the power to tax or (c) any other
jurisdiction, other than the United States, in which we or a successor
corporation is organized or any political subdivision or governmental authority
of or in that jurisdiction with the power to tax.
In addition, we will have the option to redeem for cash any or all shares of
preferred stock at any time or from time to time, upon not less than 30 nor
more than 60 days' prior notice sent by first-class mail to each holder's
registered address, at 100% of the liquidation preference per share plus
accumulated and unpaid dividends to the date of redemption, if the entity
formed by a consolidation, merger or amalgamation involving Global Crossing or
the entity to which we convey, transfer or lease substantially all our
properties and assets is required to pay additional amounts in respect of any
tax, assessment or governmental charge imposed on any holder of shares of
preferred stock as a result of a change in tax law that occurred after the date
of the consolidation, merger, amalgamation, conveyance, transfer or lease.
Provisions Relating to the Optional and Tax Redemption
In the case of any partial redemption, we will select the shares of
preferred stock to be redeemed on a pro rata basis, by lot or any other method
that we, in our discretion, deem fair and appropriate. However, we may redeem
all the shares held by holders of fewer than 100 shares or who would hold fewer
than 100 shares as a result of the redemption.
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<PAGE>
If the redemption date falls after a dividend payment record date and before
the related dividend payment date, the holders of the shares of preferred stock
at the close of business on that dividend payment record date will be entitled
to receive the dividend payable on those shares on the corresponding dividend
payment date, even if those shares are redeemed after that dividend payment
record date.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of
Global Crossing or a reduction or decrease in our capital stock resulting in a
distribution of assets to the holders of any class or series of our capital
stock, each holder of shares of preferred stock will be entitled to payment out
of our assets available for distribution of an amount equal to the then
effective liquidation preference per share of preferred stock held by that
holder, plus all accumulated and unpaid dividends on those shares to the date
of that liquidation, dissolution, winding up or reduction or decrease in
capital stock, before any distribution is made on any junior stock, including
our common stock, but after any distributions on any of our indebtedness or
shares of our senior stock. After payment in full of the liquidation preference
and all accumulated and unpaid dividends to which holders of shares of
preferred stock are entitled, the holders will not be entitled to any further
participation in any distribution of our assets. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of Global Crossing or a
reduction or decrease in our capital stock, the amounts payable with respect to
shares of preferred stock and all other parity stock are not paid in full, the
holders of shares of preferred stock and the holders of the parity stock will
share equally and ratably in any distribution of our assets in proportion to
the full liquidation preference and all accumulated and unpaid dividends to
which each such holder is entitled.
Neither the voluntary sale, conveyance, exchange or transfer, for cash,
shares of stock, securities or other consideration, of all or substantially all
of our property or assets nor the consolidation, merger or amalgamation of
Global Crossing with or into any corporation or the consolidation, merger or
amalgamation of any corporation with or into Global Crossing will be deemed to
be a voluntary or involuntary liquidation, dissolution or winding up of Global
Crossing or a reduction or decrease in our capital stock.
We are not required to set aside any funds to protect the liquidation
preference of the shares of preferred stock, although the liquidation
preference will be substantially in excess of the par value of the shares of
the preferred stock.
Voting Rights
Except as required under Bermuda law or as provided in the certificate of
designations, the holders of the shares of preferred stock will not be entitled
to vote on any matter as our shareholders, except as follows:
(1) The affirmative vote of the holders of at least a majority of the
outstanding shares of preferred stock, voting with holders of shares of all
other series of preferred stock affected in the same way as a single class,
in person or by proxy, at a special or annual meeting called for that
purpose, or by written consent in lieu of meeting, will be required to amend,
repeal or change any provisions of the certificate of designations in any
manner which would adversely affect, alter or change the powers, preferences
or special rights of the preferred stock and any of those securities affected
in the same way. With respect to any matter on which the holders are entitled
to vote as a separate class, each share of preferred stock will be entitled
to one vote.
(2) If at any time the equivalent of six quarterly dividends payable on
the shares of preferred stock are accrued and unpaid, whether or not
consecutive and whether or not declared, the holders of all outstanding
shares of preferred stock and any parity stock or senior stock having similar
voting rights then exercisable, voting separately as a single class without
regard to series, will be entitled to elect at the next annual meeting of our
shareholders two directors to serve until all dividends accumulated and
unpaid on any of those voting shares have been paid or declared and funds set
aside to provide for payment in full. In exercising the voting rights
described in this paragraph, each outstanding share of preferred stock will
be entitled to one vote.
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<PAGE>
The creation, authorization or issuance of any other class or series of our
capital stock or the increase or decrease in the amount of authorized capital
stock of any of those classes or series or of the preferred stock, or any
increase, decrease or change in the par value of any class or series of capital
stock, including the preferred stock, will not require the consent of the
holders of the preferred stock and will not be deemed to affect adversely,
alter or change the powers, preferences and special rights of the shares of
preferred stock.
Conversion Rights
Each share of preferred stock will be convertible at any time and from time
to time, at the option of the holder, into fully paid and nonassessable shares
of our common stock. The number of shares of common stock deliverable upon
conversion of a share of preferred stock, adjusted as provided under "--
Adjustments to the Conversion Price", is referred to in this document as the
"conversion ratio". The conversion ratio will be 4.6948 and will equal the
ratio the nominator of which will be the $250.00 liquidation preference per
share and the denominator of which will be the conversion price. The conversion
price will be $53.25, subject to adjustment from time to time.
A holder of shares of preferred stock may convert any or all of those shares
by surrendering to us at our principal office or at the office of the transfer
agent, as may be designated by our board of directors, the certificate or
certificates for those shares of preferred stock accompanied by a written
notice stating that the holder elects to convert all or a specified whole
number of those shares in accordance with the provisions of this section and
specifying the name or names in which the holder wishes the certificate or
certificates for shares of common stock to be issued. In case the notice
specifies a name or names other than that of the holder, the notice will be
accompanied by payment of all transfer taxes payable upon the issuance of
shares of common stock in that name or names. Other than those taxes, we will
pay any documentary, stamp or similar issue or transfer taxes that may be
payable in respect of any issuance or delivery of shares of common stock upon
conversion of shares of preferred stock. As promptly as practicable after the
surrender of that certificate or certificates and the receipt of the notice
relating to the conversion and payment of all required transfer taxes, if any,
or the demonstration to our satisfaction that those taxes have been paid, we
will deliver or cause to be delivered (a) certificates representing the number
of validly issued, fully paid and nonassessable full shares of our common stock
to which the holder, or the holder's transferee, of shares of preferred stock
being converted will be entitled and (b) if less than the full number of shares
of preferred stock evidenced by the surrendered certificate or certificates is
being converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by the surrendered certificate or certificates less
the number of shares being converted. This conversion will be deemed to have
been made at the close of business on the date of giving the notice and of
surrendering the certificate or certificates representing the shares of
preferred stock to be converted so that the rights of the holder thereof as to
the shares being converted will cease except for the right to receive shares of
common stock and accrued and unpaid dividends with respect to the shares of
preferred stock being converted, and the person entitled to receive the shares
of common stock will be treated for all purposes as having become the record
holder of those shares of common stock at that time.
If a holder of shares of preferred stock exercises conversion rights, upon
delivery of the shares for conversion, those shares will cease to accrue
dividends as of the end of the day immediately preceding the date of
redemption, but those shares will continue to be entitled to receive all
accrued dividends which the holder is entitled to receive through the last
preceding dividend payment date. Any accrued and unpaid dividends will be
payable by us as and when those dividends are paid to any remaining holders or,
if none, on the date which would have been the next succeeding dividend payment
date had there been remaining holders or at a later time when we believe we
have adequate available capital under applicable law to make such a payment.
However, shares of preferred stock surrendered for conversion after the close
of business on any record date for the
payment of dividends declared and before the opening of business on the
dividend payment date relating to that record date must be accompanied by a
payment in cash of an amount equal to the dividend declared in respect of those
shares.
In case any shares of preferred stock are to be redeemed, the right to
convert those shares of preferred stock will terminate at the close of business
on the business day immediately preceding the date fixed for redemption unless
we default in the payment of the redemption price of those shares.
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Except as provided for in the following sentence, we will make no payment or
adjustment to any holder of shares of preferred stock surrendered for
conversion in respect of any accrued and unpaid dividends on the shares of
preferred stock surrendered for conversion. If we redeem the preferred stock
between December 15, 2004 through and including January 14, 2005, any holder of
shares of preferred stock, electing to convert the shares of preferred
stock between December 15, 2004 through and including January 14, 2005, will be
entitled to receive dividends accrued between November 1, 2004 and December 15,
2004 on the converted shares of preferred stock.
In connection with the conversion of any shares of preferred stock, no
fractions of shares of common stock will be issued, but we will pay a cash
adjustment in respect of any fractional interest in an amount equal to (a) the
fractional interest multiplied by the liquidation preference per share, divided
by (b) the conversion price. If more than one share of preferred stock will be
surrendered for conversion by the same holder at the same time, the number of
full shares of common stock issuable on conversion of those shares will be
computed on the basis of the total number of shares of preferred stock so
surrendered.
We will at all times reserve and keep available, free from preemptive
rights, for issuance upon the conversion of shares of preferred stock a number
of our authorized but unissued shares of common stock that will from time to
time be sufficient to permit the conversion of all outstanding shares of
preferred stock if necessary to permit the conversion of all outstanding shares
of preferred stock. Before the delivery of any securities which we will be
obligated to deliver upon conversion of the preferred stock, we will comply
with all applicable federal and state laws and regulations which require action
to be taken by us. All shares of common stock delivered upon conversion of the
preferred stock will upon delivery be duly and validly issued and fully paid
and nonassessable, free of all liens and charges and not subject to any
preemptive rights.
Adjustments to the Conversion Price
The conversion price will be subject to adjustment from time to time as
follows:
(1) Stock splits and combinations. In case we, at any time or from time to
time after the issuance date of the shares of preferred stock (a) subdivide
or split the outstanding shares of our common stock, (b) combine or
reclassify the outstanding shares of our common stock into a smaller number
of shares or (c) issue by reclassification of the shares of our common stock
any shares of our capital stock, then the conversion price in effect
immediately prior to that event or the record date for that event, whichever
is earlier, will be adjusted so that the holder of any shares of preferred
stock thereafter surrendered for conversion will be entitled to receive the
number of shares of our common stock or of our other securities which the
holder would have owned or have been entitled to receive after the occurrence
of any of the events described above, had those shares of preferred stock
been surrendered for conversion immediately before the occurrence of that
event or the record date for that event, whichever is earlier.
(2) Stock dividends in common stock. In case we, at any time or from time
to time after the issuance date of the shares of preferred stock, pay a
dividend or make a distribution in shares of our common stock on any class of
our capital stock other than dividends or distributions of shares of common
stock or other securities with respect to which adjustments are provided in
paragraph (1) above, and the total number of shares constituting the dividend
or distribution exceeds 25% of the total number of shares of common stock
outstanding at the close of business on the record date fixed for
determination of shareholders entitled to receive the dividend or
distribution, the conversion price will be adjusted so that the holder of
each share of preferred stock will be entitled to receive, upon conversion of
that share, the number of shares of our common stock determined by
multiplying (a) the conversion price by (b) a fraction, the numerator of
which will be the number of shares of common stock outstanding and the
denominator of which will be the sum of that number of shares and the total
number of shares issued in that dividend or distribution. In case the total
number of shares constituting that dividend or distribution does not exceed
25% of the total number of shares of common stock outstanding at the close of
business on the record date fixed for that dividend or
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distribution, the shares of common stock will be considered to be issued at
the time of any such next succeeding dividend or other distribution in which
the number of shares of common stock issued, together with the number of
shares issued in all previous such dividends and distributions, will exceed
such 25%.
(3) Issuance of rights or warrants. For purposes of this paragraph and
paragraph (4), "current market price" means the average of the daily closing
prices for the five consecutive trading days selected by our board of
directors beginning not more than 20 trading days before, and ending not
later than the date of the applicable event described in this paragraph and
the date immediately preceding the record date fixed in connection with that
event. In case we issue to all holders of our common stock rights or warrants
expiring within 45 days entitling those holders to subscribe for or purchase
our common stock at a price per share less than the current market price, the
conversion price in effect immediately before the close of business on the
record date fixed for determination of shareholders entitled to receive those
rights or warrants will be reduced by multiplying the conversion price by a
fraction, the numerator of which is the sum of the number of shares of our
common stock outstanding at the close of business on that record date and the
number of shares of common stock that the aggregate offering price of the
total number of shares of our common stock so offered for subscription or
purchase would purchase at the current market price and the denominator of
which is the sum of the number of shares of common stock outstanding at the
close of business on that record date and the number of additional shares of
our common stock so offered for subscription or purchase. For purposes of
this paragraph (3), the issuance of rights or warrants to subscribe for or
purchase securities convertible into shares of our common stock will be
deemed to be the issuance of rights or warrants to purchase shares of our
common stock into which those securities are convertible at an aggregate
offering price equal to the sum of the aggregate offering price of those
securities and the minimum aggregate amount, if any, payable upon conversion
of those securities into shares of our common stock. This adjustment will be
made successively whenever any such event occurs.
(4) Distribution of indebtedness, securities or assets. In case we
distribute to all holders of our common stock, whether by dividend or in a
merger, amalgamation or consolidation or otherwise, evidences of
indebtedness, shares of capital stock of any class or series, other
securities, cash or assets, other than common stock, rights or warrants
referred to in paragraph (3) above or a dividend payable exclusively in cash
and other than as a result of a fundamental change described in paragraph (5)
below, the conversion price in effect immediately before the close of
business on the record date fixed for determination of shareholders entitled
to receive that distribution will be reduced by multiplying the conversion
price by a fraction, the numerator of which is the current market price on
that record date less the fair market value, as determined by our board of
directors, whose determination in good faith will be conclusive, of the
portion of those evidences of indebtedness, shares of capital stock, other
securities, cash and assets so distributed applicable to one share of common
stock and the denominator of which is the current market price. This
adjustment will be made successively whenever any such event occurs.
(5) Fundamental changes. For purposes of this paragraph (5), "fundamental
change" means any transaction or event, including any merger, consolidation,
sale of assets, tender or exchange offer, reclassification, compulsory share
exchange or liquidation, in which all or substantially all outstanding shares
of our common stock are converted into or exchanged for stock, other
securities, cash or assets. If a fundamental change occurs, the holder of
each share of preferred stock outstanding immediately before that fundamental
change occurred, will have the right upon any subsequent conversion to
receive, but only out of legally available funds, to the extent required by
applicable law, the kind and amount of stock, other securities, cash and
assets that that holder would have received if that share had been converted
immediately prior to the fundamental change.
We will not, however, be required to give effect to any adjustment in the
conversion price unless and until the net effect of one or more adjustments,
each of which will be carried forward until counted toward adjustment, will
have resulted in a change of the conversion price by at least 1%, and when the
cumulative net effect of more than one adjustment so determined will be to
change the conversion price by at least 1%, that change in the conversion price
will be given effect. In the event that, at any time as a result of the
provisions of
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this section, the holder of shares of preferred stock upon subsequent
conversion become entitled to receive any shares of our capital stock other
than common stock, the number of those other shares so receivable upon
conversion of shares of preferred stock will thereafter be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in this section.
There will be no adjustment to the conversion price in case of the issuance
of any shares of our stock in a merger, reorganization, acquisition,
reclassification, recapitalization or other similar transaction except as
provided in this section.
In any case in which this section requires that an adjustment as a result
of any event become effective from and after a record date, we may elect to
defer until after the occurrence of that event (a) issuing to the holder of
any shares of preferred stock converted after that record date and before the
occurrence of that event the additional shares of common stock issuable upon
that conversion over and above the shares issuable on the basis of the
conversion price in effect immediately before adjustment and (b) paying to
that holder any amount in cash in lieu of a fractional share of common stock.
If we take a record of the holders of our common stock for the purpose of
entitling them to receive a dividend or other distribution, and after this and
before the distribution to our shareholders legally abandon our plan to pay or
deliver that dividend or distribution, then no adjustment in the number of
shares of our common stock issuable upon conversion of shares of preferred
stock or in the conversion price then in effect will be required by reason of
the taking of that record.
Our board of directors will have the power to resolve any ambiguity or
correct any error in this section, and its action in so doing will be final
and conclusive.
Change in Control Put Right
For purposes of this section, "change in control" of Global Crossing means
the occurrence of any of the following:
. any "person", as that term is used in Section 13(d)(3) of the
Exchange Act, other than a "permitted holder", is or becomes the
beneficial owner, directly or indirectly, of 35% or more of the
voting stock, measured by voting power rather than number of
shares, of Global Crossing, and the permitted holders own, in the
aggregate, a lesser percentage of the total voting stock, measured
by voting power rather than by number of shares, of Global
Crossing than that person and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the board of directors of Global Crossing; for the purposes
of this clause, that person will be deemed to "beneficially own" any
voting stock of a specified corporation held by a parent corporation if
that person beneficially owns, directly or indirectly, more than 35% of
the voting stock, measured by voting power rather than by number of
shares, of that parent corporation and the permitted holders
beneficially own, directly or indirectly, in the aggregate a lesser
percentage of voting stock, measured by voting power rather than by
number of shares, of that parent corporation and do not have the right
or ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of that parent
corporation;
. during any period of two consecutive years, "continuing directors"
cease for any reason to constitute a majority of the board of
directors of Global Crossing;
. Global Crossing consolidates or merges with or into any other
person, other than a consolidation or merger (a) of Global
Crossing into Global Crossing Holdings or Global Crossing Holdings
into Global Crossing, or Global Crossing with or into a subsidiary
of Global Crossing or (b) under a transaction in which the
outstanding voting stock of Global
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Crossing is changed into or exchanged for cash, securities or
other property with the effect that the beneficial owners of the
outstanding voting stock of Global Crossing immediately before
that transaction, beneficially own, directly or indirectly, more
than 35% of the voting stock, measured by voting power rather than
number of shares, of the surviving corporation immediately
following that transaction; or
. the sale, transfer, conveyance or other disposition, other than by
way of merger or consolidation, in one or a series of related
transactions, of all or substantially all of the assets of Global
Crossing and its subsidiaries, taken as a whole, to any person
other than a subsidiary of Global Crossing or a permitted holder
or a person more than 50% of the voting stock, measured by voting
power rather than by number of shares, of which is owned, directly
or indirectly, following such transaction or transactions by the
permitted holders; however, sales, transfers, conveyances or other
dispositions in the ordinary course of business of capacity on
cable systems owned, controlled or operated by Global Crossing or
any subsidiary or of telecommunications capacity or transmission
rights acquired by Global Crossing or any subsidiary for use in
its business, including for sale, lease, transfer, conveyance or
other disposition to any customer of Global Crossing or any
subsidiary will not be deemed a disposition of assets for purposes
of this paragraph.
For purposes of the above paragraph, "permitted holder" means Pacific
Capital Group and CIBC Oppenheimer Corp. and their respective affiliates; and
"continuing directors" means individuals who at the beginning of the period of
determination constituted the board of directors of Global Crossing, together
with any new directors whose election by that board of directors or whose
nomination for election by the shareholders of Global Crossing was approved by
a vote of at least a majority of the directors of Global Crossing then still
in office who were either directors at the beginning of that period or whose
election or nomination for election was previously so approved or is designee
of any one of the "permitted holders" or any combination of the permitted
holders or was nominated or elected by any permitted holder(s) or any of their
designees.
If there is a change in control of Global Crossing, each holder of shares
of preferred stock will have the right to require us to purchase all or any
part of that holder's shares of preferred stock at a purchase price in cash
equal to 100% of the liquidation preference of those shares, plus all
accumulated and unpaid dividends on those shares to the date of purchase.
Within 30 days following any change in control, Global Crossing will mail a
notice to each holder describing the transaction or transactions that
constitute the change in control and offering to purchase that holder's
preferred stock on the date specified in that notice, which date will be no
earlier than 30 days and no later than 60 days from the date the notice is
mailed.
We will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations to the extent those laws and
regulations are applicable in connection with the purchase of preferred stock
as a result of a change in control. To the extent that the provisions of any
securities laws or regulations conflict with any of the provisions of this
section, we will comply with the applicable securities laws and regulations
and will be deemed not to have breached our obligations under this section.
On the date scheduled for payment of the shares of preferred stock, we
will, to the extent lawful, (a) accept for payment all shares of preferred
stock properly tendered, (b) deposit with the transfer agent an amount equal
to the purchase price of the shares of preferred stock so tendered and (c)
deliver or cause to be delivered to the transfer agent shares of preferred
stock so accepted together with an officers' certificate stating the aggregate
liquidation preference of the shares of preferred stock being purchased by us.
The transfer agent will promptly mail or deliver to each holder of shares of
preferred stock so tendered the applicable payment for those shares of
preferred stock, and the transfer agent will promptly countersign and mail or
deliver, or cause to be transferred by book-entry, to each holder new shares
of preferred stock equal in liquidation preference to any unpurchased portion
of the shares of preferred stock surrendered, if any. We will publicly
announce the results of our offer on or as soon as practicable after the
payment date for the purchase of shares of preferred stock in connection with
a change in control of Global Crossing.
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We will not be required to make an offer to purchase any shares of
preferred stock upon the occurrence of a change in control of Global Crossing
if a third party makes that offer in the manner, at the times and otherwise in
compliance with the requirements described in this section and purchases all
shares of preferred stock validly tendered and not withdrawn.
The right of the holders of shares of preferred stock described in this
section will be subject to the obligation of Global Crossing Holdings to:
. repay its debt obligations in full under its corporate credit
facility; and
. offer to purchase and purchase all of its senior notes and
outstanding shares of preferred stock that have been tendered for
purchase in connection with a change in control of Global
Crossing.
In addition, the right of the holders of shares of preferred stock
described in this section will be subject to the repurchase or repayment of
our future indebtedness, which we are required to repurchase or repay in
connection with a change in control.
When we have satisfied these obligations and, subject to the legal
availability of funds for this purpose, we will purchase all shares tendered
upon a change in control.
In addition, the holders of shares of preferred stock may not be able to
exercise the rights described in this section if we fail to meet specified
solvency tests under Bermuda law. These solvency tests would require us to
determine that we will be solvent, taking into account the purchase of shares
of preferred stock as provided in this section, and that we will not otherwise
breach the provisions of any act, regulation or license applicable to us.
Exchange of Shares of Preferred Stock
If we are reorganized so that the shares of our common stock are exchanged
for shares of the common stock of a new entity, the common stock of which is
traded on the Nasdaq National Market or another recognized securities
exchange, then, by notice to the holders of the preferred stock but without
any required consent on their part, we will have the option to cause the
exchange of the shares of preferred stock for shares of preferred stock of
that new entity having the same terms and conditions as provided in the
certificate of designations of the preferred stock. If we exercise that option,
we will indemnify the holders of shares of preferred stock if such an exchange
would, under then applicable United States federal income tax law, result in the
recognition of gain by holders of shares of the preferred stock. However, we
will not indemnify you for any payments described under "--Tax Redemption" on
page 42 unless and to the extent it is so provided in that section.
However, in the event that the new entity is not incorporated as a Bermuda
company or in the event the share structure of the new entity is not identical
to our own, the rights attaching to the preferred stock of the new entity may
be adjusted so as to comply with the local law of the country of incorporation
of that new entity or the share structure of that new entity.
Registration Rights
On December 15, 1999, we entered into a registration rights agreement with
the initial purchasers of the preferred stock. Under the registration rights
agreement, we agreed to use our reasonable best efforts to cause a shelf
registration statement to become effective under the Securities Act to cover
resales of our shares of preferred stock and common stock that we may issue
upon conversion of the shares of preferred stock or to pay dividends on the
shares of preferred stock. We also agreed to use our reasonable best efforts
to maintain that registration statement continuously effective for up to two
years after the shelf registration first becomes effective or a shorter period
if all restricted securities traded under the shelf registration statement
have all been sold.
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If the shelf registration statement ceases to be effective or usable in
connection with resales of shares of preferred stock and common stock during
the periods specified in the registration rights agreement--we will refer to
that event as a "registration default"--then we will pay to each holder of
shares registrable under the registration rights agreement, with respect to the
first 90-day period immediately following the occurrence of a registration
default, additional dividends on the preferred stock in an amount equal to
0.50% per year, which we will refer to as "special dividends". The amount of
the special dividends will increase by an additional 0.25% per year with
respect to any subsequent 90-day period, but in no event will that rate exceed
1.00% per year in the aggregate regardless of the number of registration
defaults, until all registration defaults have been cured. If, after the cure
of all registration defaults then in effect, there is a subsequent registration
default, the special dividend rate for that subsequent registration default
will initially be 0.25%, regardless of the special dividend rate in effect with
respect to any prior registration default at the time of the cure of that
registration default. All accrued special dividends will be paid to the holders
entitled to those dividends, in the manner provided for the payment of
dividends in the certificate of designations.
Special dividends, like ordinary dividends, will be paid in cash, although
we will have the option to deliver shares of our common stock to the transfer
agent for the preferred stock, which will resell those shares of common stock
and use the proceeds to pay special dividends in cash to the holders.
This is a summary of some important provisions of the registration rights
agreement. This summary is subject to, and is qualified in its entirety by
reference to, all the provisions of the registration rights agreement. We filed
the registration rights agreement as an exhibit to the registration statement
of which this prospectus is a part. Alternatively, you may request a copy of
the registration rights agreement by contacting us at the address provided
under "Where You Can Find More Information" on page ii.
Transfer Agent, Registrar and Dividend Disbursing Agent
The transfer agent, registrar, dividend disbursing agent and redemption
agent for the shares of preferred stock is EquiServe.
Book-Entry Issuance
The shares of preferred stock is issued as one or more global certificates
registered in the name of the DTC or its nominee. The depositary for the
preferred stock is the DTC. The preferred stock has been issued in accordance
with the procedures described under "Book-Entry Procedures and Settlement"
below.
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BOOK-ENTRY PROCEDURES AND SETTLEMENT
Upon issuance, all book-entry certificates will be represented by one or
more fully registered global certificate, without coupons. Each global
certficate will be deposited with, or on behalf of, the DTC, a securities
depository, and will be registered in the name of the DTC or a nominee of the
DTC. The DTC will thus be the only registered holder of the shares of
preferred stock.
Purchasers of shares of preferred stock may only hold interests in the
global certificates through the DTC if they are participants in the DTC
system. Purchasers may also hold interests through a securities intermediary--
banks, brokerage houses and other institutions that maintain securities
accounts for customers--that has an account with the DTC or its nominee. The
DTC will maintain accounts showing the security holdings of its participants,
and these participants will in turn maintain accounts showing the security
holdings of their customers. Some of these customers may themselves be
securities intermediaries holding securities for their customers. Thus, each
beneficial owner of a book-entry certficate will hold that certficate
indirectly through a hierarchy of intermediaries, with the DTC at the "top"
and the beneficial owner's own securities intermediary at the "bottom".
The shares of preferred stock of each beneficial owner of a book-entry
certficate will be evidenced solely by entries on the books of the beneficial
owner's securities intermediary. The actual purchaser of shares of preferred
stock will generally not be entitled to have the shares represented by the
global certificates registered in its name and will not be considered the
owner under our charter or bye-laws. In most cases, a beneficial owner will
also not be able to obtain a paper certificate evidencing the holder's
ownership of shares of preferred stock. The book-entry system for holding
securities eliminates the need for physical movement of certificates and is
the system through which most publicly traded stock is held in the United
States. However, the laws of some jurisdictions require some purchasers of
securities to take physical delivery of their securities in definitive form.
These laws may impair the ability of a beneficial owner to transfer book-entry
shares of preferred stock.
A beneficial owner of book-entry shares of preferred stock represented by a
global certficate may exchange the shares for definitive (paper) shares of
preferred stock only if:
. the DTC is unwilling or unable to continue as depositary for that
global certficate and we do not appoint a qualified replacement
for the DTC within 90 days; or
. we, in our sole discretion, decide to allow some or all book-entry
certificates to be exchangeable for definitive shares of preferred
stock in registered form.
Any global certficate that is so exchanged will be exchanged in whole for
definitive shares of preferred stock in registered form, with the same terms
and of an equal aggregate liquidation preference. Definitive shares of
preferred stock will be registered in the name or names of the person or
persons specified by the DTC in a written instruction to the registrar of the
preferred stock. The DTC may base its written instruction upon directions that
it receives from its participants.
In this prospectus, references to actions taken by holders of shares of
preferred stock will mean actions taken by the DTC upon instructions from its
participants, and references to payments and notices of redemption to holders
of shares of preferred stock will mean payments and notices of redemption to
the DTC as the registered holder of the shares of preferred stock for
distribution to participants in accordance with the DTC's procedures.
The DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under section 17A of the Exchange Act. The rules
applicable to the DTC and its participants are on file with the SEC.
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The DTC's management is aware that some computer applications, systems, and
the like for processing dates that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "Year 2000
problems". The DTC has informed its participants and other members of the
financial community that it has developed and is implementing a program so that
its systems, as they relate to the timely payment of distributions to
shareholders, book-entry deliveries, and settlement of trades within the DTC,
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally, the
DTC's plan includes a testing phase, which is expected to be completed within
appropriate time frames.
We will not have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the book-entry securities or for maintaining, supervising or
reviewing any records relating to beneficial ownership interests.
The DTC may discontinue providing its services as securities depositary at
any time by giving reasonable notice. Under those circumstances, in the event
that a successor securities depositary is not appointed, share certificates are
required to be printed and delivered. Additionally, we may decide to
discontinue use of the system of book-entry transfers through the DTC or any
successor depositary with respect to the shares of preferred stock. In that
event, certificates for the shares will be printed and delivered.
The information in this section concerning the DTC and the DTC's book-entry
system has been obtained from sources that we believe to be reliable, but we do
not take responsibility for the accuracy of that information.
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DESCRIPTION OF COMMON STOCK
The following summary is a description of the material terms of our common
stock, does not purport to be complete and is subject in all respects to the
applicable provisions of Bermuda law and of our constituent documents and of
the constituent documents of our subsidiaries. We have filed our memorandum of
association and bye-laws as exhibits to the registration statement of which
this prospectus is a part.
General
Under our memorandum of association, our authorized share capital is
$30,200,000, divided into:
. 3,000,000,000 shares of common stock, par value $0.01 per share; and
. 20,000,000 shares of preferred stock, par value $0.01 per share.
Voting and transfer restrictions
Voting restriction. Each share of our common stock has one vote, except that
if any shareholder owns, directly, indirectly or constructively under Section
958 of the Internal Revenue Code or beneficially directly or indirectly as a
result of the possession of sole or shared voting power within the meaning of
Section 13(d) of the Exchange Act and the rules and regulations promulgated
under that act, more than 9.5%, or, in the case of Canadian Imperial Bank of
Commerce and its affiliates, collectively, more than 20%, of the votes cast in
connection with any matter which our shareholders are voting on, the number of
votes of that shareholder will be limited to 9.5%, or, in the case of the
Canadian Imperial Bank of Commerce and its affiliates, collectively, to 20% of
those votes cast, based on a formula contained in our bye-laws. The additional
votes that could be cast by that shareholder but for the restrictions on the
voting rights will be allocated to the other shareholders pro rata, based on
their number of shares of common stock. Shareholders that have been allocated
additional votes may not exceed the voting limitations as a result of that
allocation.
Transfer restriction. Our bye-laws also provide that any transfer of shares
of common stock or any interest in those shares that results in a shareholder,
other than Pacific Capital Group, GKW Unified Holdings, Canadian Imperial Bank
of Commerce, Continental Casualty Company or MRCo or their affiliates or some
of their lenders, beneficially owning within the meaning of Section 13(d) of
the Exchange Act, directly or indirectly, 5% of the outstanding shares of our
common stock, if that shareholder is a natural person, or otherwise 9.5% of the
outstanding shares of our common stock, without the approval of a majority of
the members of the board of directors and of shareholders holding at least a
majority of the total votes cast at the shareholder meeting called to approve
that transfer will not be registered in the share register and will be void and
of no effect.
Amendments to the voting reallocation and transfer restriction provisions of
our bye-laws require the approval of our board of directors and shareholders
holding at least 75% of the votes of all outstanding shares of common stock. In
the event of any amendment to these bye-laws, under some circumstances, we have
the obligation to indemnify and hold harmless any shareholder who, as a result
of that amendment, becomes subject to treatment as a U.S. shareholder for
purposes of Section 951 and subsequent sections of the Internal Revenue Code
from and against all losses, costs, damages, liabilities and expenses directly
or indirectly arising out of that treatment.
These voting and transfer restrictions could make it difficult for any
person or group of persons acting in concert, other than some existing owners,
to acquire control of Global Crossing.
Distributions
Holders of common stock are treated equally with respect to all
distributions to our shareholders.
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Global Crossing stockholders agreement and registration rights agreement
Pacific Capital Group, GKW Unified Holdings, affiliates of Canadian Imperial
Bank of Commerce, Continental Casualty Company, MRCo, ourselves and some other
shareholders of ours, including some of our officers and directors and their
affiliates, have entered into a stockholders agreement and a registration
rights agreement, each filed as an exhibit to our registration statements.
Under the stockholders agreement, we have been granted a right of first
refusal on specified private transfers by these shareholders during the first
two years after the consummation of our initial public offering on August 14,
1998. In addition, subject to the exceptions in the stockholders agreement,
some of these shareholders have rights, which are referred to as tag-along
rights, permitting these shareholders to participate, on the same terms and
conditions, in some transfers of shares by any other of these shareholders as
follows:
(1) Pacific Capital Group, GKW Unified Holdings and Canadian Imperial
Bank of Commerce and their affiliates and permitted transferees have the
right to participate in any transaction initiated by any of them to
transfer 5% or more of our outstanding securities; and
(2) Pacific Capital Group, GKW Unified Holdings, Canadian Imperial Bank
of Commerce, Continental Casualty Company and MRCo and their affiliates and
permitted transferees have the right to participate in any transaction
initiated by any of them to transfer any of our securities if that
transaction would result in a change of control of Global Crossing.
In addition, so long as Gary Winnick, Pacific Capital Group and GKW Unified
Holdings and some of their transferees collectively beneficially own, within
the meaning of Section 13(d) of the Exchange Act, at least 15% of the
outstanding shares of our common stock, they are entitled to seek appraisal for
the fair market value of the shares of our common stock that they beneficially
own and payment of the fair value in cash in connection with any merger or
consolidation of Global Crossing or the sale, lease or transfer of all or
substantially all of our assets, if they, in their capacity as our
shareholders, did not vote in favor of or consent to those transactions and
beneficially own the shares of our common stock as to which appraisal is sought
immediately before the transaction.
Under the registration rights agreement, our shareholders who are parties to
that agreement and a number of their transferees have demand and piggyback
registration rights and will receive indemnification and, in some
circumstances, reimbursement for expenses from us in connection with an
applicable registration.
Transfer Agent, Registrar and Dividend Disbursing Agent
The transfer agent, registrar, dividend disbursing agent and redemption
agent for the shares of our common stock is EquiServe.
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CERTAIN INCOME TAX CONSEQUENCES
Taxation of Global Crossing
We believe that a significant portion of the income derived from our subsea
systems will not be subject to tax in Bermuda, which currently has no corporate
income tax, or other countries in which we or our affiliates conduct activities
or in which our customers are located, including the United States. However,
this belief is based upon the anticipated nature and conduct of our business,
which may change, and upon our understanding of our position under the tax laws
of the various countries in which we have assets or conduct activities, which
position is subject to review and possible challenge by taxing authorities and
to possible changes in law, which may have retroactive effect. The extent to
which certain taxing jurisdictions may require us to pay tax or to make
payments in lieu of tax cannot be determined in advance. In addition, our
operations and payments due to us may be affected by changes in taxation,
including retroactive tax claims or assessments of withholding on amounts
payable to us or other taxes assessed at the source, in excess of the taxation
we anticipate based on business contacts and practices and the current tax
regimes. There can be no assurance that these factors will not have a material
adverse effect on us.
Bermuda Tax Considerations
Under current Bermuda law, we are not subject to tax on income or capital
gains. Furthermore, we have obtained from the Minister of Finance of Bermuda
under the Exempted Undertakings Tax Protection Act 1966, an undertaking that,
in the event that Bermuda enacts any legislation imposing tax computed on
profits, income, any capital asset, gain or appreciation, then the imposition
of that tax will not be applicable to us or to any of our operations, neither
will that tax, or any tax in the nature of estate duty or inheritance tax,
become applicable to our stock, until March 28, 2016. This undertaking does
not, however, prevent the imposition of any tax or duty on persons ordinarily
resident in Bermuda or any property tax on any company, including ourselves,
owning real property or leasehold interests in Bermuda.
United States Federal Income Tax Considerations
We and our non-United States subsidiaries will be subject to United States
federal income tax at regular corporate rates, and to United States branch
profits tax, on our income, if any, that is effectively connected with the
conduct of a trade or business within the United States, and will be required
to file federal income tax returns reflecting that income. We intend to conduct
our operations so as to reduce the amount of our effectively connected income.
However, we cannot assure you that the Internal Revenue Service will agree with
the positions we take in this regard. Moreover, our United States subsidiaries
will be subject to United States federal income tax on their worldwide income
regardless of its source, subject to reduction by allowable foreign tax
credits, and distributions by our United States subsidiaries to us or to our
non-United States subsidiaries generally will be subject to United States
withholding tax.
Taxation of Holders of Preferred Stock
Bermuda Tax Considerations
Under current Bermuda law, no income, withholding or other taxes or stamp or
other duties are imposed upon the issue, transfer or sale of the preferred
stock or on any payments thereunder. See "Taxation of Global Crossing--Bermuda
Tax Considerations" for a description of the undertaking on taxes obtained by
us from the Minister of Finance of Bermuda.
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United States Federal Income Tax Considerations
The following is a summary of certain United States federal income tax
consequences, as of the date hereof, for beneficial owners of shares of
preferred stock and shares of common stock into which the shares of preferred
stock may be converted, that hold the shares of preferred stock and the shares
of common stock as capital assets, and that are "United States persons" under
the Internal Revenue Code. Under the Internal Revenue Code, you are a "United
States person" if you are:
. a citizen or resident of the United States;
. a corporation or partnership created or organized in or under the
laws of the United States or any political subdivision of the United
States;
. an estate the income of which is subject to United States federal
income taxation regardless of its source;
. a trust that is subject to the supervision of a court within the
United States and the control of one or more United States persons;
or
. a trust that has a valid election in effect under applicable United
States Treasury regulations to be treated as a United States person.
This summary is based on current law, which is subject to change, perhaps
retroactively, is for general purposes only and should not be considered tax
advice. This summary does not represent a detailed description of the United
States federal income tax consequences to you in light of your particular
circumstances. In addition, it does not present a description of the United
States federal income tax consequences applicable to you if you are subject to
special treatment under the United States federal income tax laws, including
if you are:
. a dealer in securities or currencies;
. a trader in securities if you elect to use a mark-to-market method
of accounting for your securities holdings;
. a financial institution;
. an insurance company;
. a tax-exempt organization;
. a person liable for alternative minimum tax;
. a person holding shares of preferred stock or shares of common stock
as part of a hedging, integrated or conversion transaction,
constructive sale or straddle;
. a person owning, actually or constructively, 10% or more of our
voting stock or 10% or more of the voting stock of any of our non-
United States subsidiaries; or
. a United States person whose "functional currency" is not the United
States dollar.
We cannot assure you that a later change in law will not alter
significantly the tax considerations that we describe in this summary.
If a partnership holds shares of preferred stock or shares of common stock,
the tax treatment of a partner will generally depend upon the status of the
partner and the activities of the partnership. If you are a partner of a
partnership holding shares of preferred stock or shares of common stock, you
should consult your tax advisor.
You should consult your own tax advisor concerning the particular United
States federal income tax consequences to you of the ownership and disposition
of the shares of preferred stock and the shares of common stock, as well as
the consequences to you arising under the laws of any other taxing
jurisdiction.
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Taxation of Dividends
Subject to the passive foreign investment company rules discussed below, the
gross amount of distributions you receive on your shares of preferred stock or
shares of common stock will generally be treated as dividend income to you if
the distributions are made from our current and accumulated earnings and
profits calculated according to United States federal income tax principles.
That income will be includible in your gross income as ordinary income on the
day you receive it. You will not be entitled to claim a dividends received
deduction with respect to distributions you receive from us.
Although we currently have current earnings and profits, the existence of
current or accumulated earnings and profits in subsequent years will depend on
future levels of profits and losses which we cannot accurately predict at this
time. To the extent that the amount of any distribution exceeds our current and
accumulated earnings and profits for a taxable year, the distribution will
first be treated as a tax-free return of capital, causing a reduction in your
adjusted basis in the shares, thereby increasing the amount of gain, or
decreasing the amount of loss, you will recognize on a subsequent disposition
of the shares, and the balance in excess of adjusted basis will be taxed as
capital gain recognized on a sale or exchange.
If, for United States federal income tax purposes, we are classified as a
"United States-owned foreign corporation", distributions made to you with
respect to your shares that are taxable as dividends generally will be treated
for United States foreign tax credit purposes as (1) foreign source "passive
income" or, in the case of some holders, foreign source "financial services
income" and (2) United States source income, in proportion to our earnings and
profits in the year of such distribution allocable to foreign and United States
sources, respectively. For this purpose, we will be treated as a United States-
owned foreign corporation so long as stock representing 50% or more of the
voting power or value of our stock is owned, directly or indirectly, by United
States persons.
Redemption Premium
Under Section 305(c) of the Internal Revenue Code and the applicable
regulations thereunder, if in certain circumstances the redemption price of the
preferred stock exceeds its issue price by more than a de minimis amount, the
difference, which we call "redemption premium", will be taxable as a
constructive distribution to you over time of additional preferred stock. These
constructive distributions would be treated first as a dividend to the extent
of our current and accumulated earnings and profits and otherwise would be
subject to the treatment described above for dividends. Because the preferred
stock provides for optional rights of redemption by us at prices in excess of
the issue price, you could be required to recognize such excess if, based on
all of the facts and circumstances, the optional redemptions are more likely
than not to occur. Applicable regulations provide a "safe harbor" under which a
right to redeem will not be treated as more likely than not to occur if (1) you
are not related to us within the meaning of the regulations; (2) there are no
plans, arrangements or agreements that effectively require or are intended to
compel us to redeem the stock; and (3) exercise of the right to redeem would
not reduce the yield of the stock, as determined under the regulations.
Regardless of whether the optional redemptions are more likely than not to
occur, constructive dividend treatment will not result if the redemption
premium does not exceed a de minimis amount or is in the nature of a penalty
for premature redemption. We intend to take the position that the existence of
our optional redemption rights does not result in a constructive distribution
to you.
Disposition of the Shares of Preferred Stock or Shares of Common Stock
Subject to the passive foreign investment company rules discussed below,
when you sell or otherwise dispose of your shares of preferred stock, other
than by way of a conversion, or you sell or otherwise dispose of your shares of
common stock, you will recognize capital gain or loss in an amount equal to the
difference between the amount you realize for the shares and your adjusted tax
basis in the shares. In general, your adjusted tax basis in the shares of
preferred stock will be your cost of obtaining the shares of preferred stock
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increased by any redemption premium previously included in income by you and
reduced by any previous distributions that are not characterized as dividends.
In general, your adjusted tax basis in the shares of common stock will be your
initial tax basis as described below in the discussion regarding conversion,
reduced by any previous distributions that are not characterized as dividends.
For foreign tax credit limitation purposes, such gain or loss will generally be
treated as United States source. If you are an individual, and the shares of
preferred stock or common stock being sold or otherwise disposed of are capital
assets that you have held for more than one year, your gain recognized will be
taxed at a maximum tax rate of 20%. Your ability to deduct capital losses is
subject to limitations.
A redemption of the preferred stock by us would be treated, under Section
302 of the Internal Revenue Code, either as a sale or exchange giving rise to
capital gain or loss, or as described below as a dividend.
If a redemption of shares of the preferred stock for cash is treated as a
dividend with respect to you under Section 302 of the Internal Revenue Code,
you (1) will not recognize any loss on the exchange and (2) will recognize
dividend income, rather than capital gain, to the extent of your proportionate
share of our current or accumulated earnings and profits. Under Section 302 of
the Internal Revenue Code, the redemption will not be treated as a dividend
provided that, after giving effect to the constructive ownership rules of
Section 318 of the Internal Revenue Code, the redemption (1) represents a
"complete termination" of your stock interest in us, (2) is "substantially
disproportionate" with respect to you or (3) is "not essentially equivalent to
a dividend" with respect to you, all within the meaning of Section 302(b) of
the Internal Revenue Code. A redemption will be "not essentially equivalent to
a dividend" as to you if it results in a "meaningful reduction" in your
interest in us, after application of the constructive ownership rules of
Section 318 of the Internal Revenue Code. In general, there are no fixed rules
for determining whether a "meaningful reduction" has occurred. You should
consult your tax advisor as to your ability in light of your own particular
circumstances to satisfy any of the foregoing tests.
Conversion
Generally, no gain or loss will be recognized upon conversion of shares of
preferred stock into shares of common stock, except with respect to any cash
paid in lieu of fractional shares of common stock. The tax basis of shares of
common stock received upon conversion of shares of preferred stock generally
will be equal to the tax basis of the shares of preferred stock so converted
and the holding period of the shares of common stock generally will include the
holding period of the shares of preferred stock so converted.
Adjustments to the conversion ratio of the preferred stock pursuant to the
anti-dilution provisions, see "Description of the Preferred Stock--Adjustments
to the Conversion Price" on page 46, may result in a taxable deemed
distribution to you pursuant to Section 305 of the Code if (1) as a result of
that adjustment your proportionate interest in our assets or earnings and
profits is increased and (2) the adjustment is not made under a bona fide,
reasonable anti-dilution formula. An adjustment to the conversion ratio of the
preferred stock would not be considered made under such a formula if the
adjustment were made to compensate you for certain taxable distributions to
other common stock holders. Thus, under certain circumstances, an adjustment
might give rise to a taxable dividend to you even though you did not receive
any cash.
Passive Foreign Investment Company
We do not believe that we are a passive foreign investment company for
United States federal income tax purposes and do not expect to become one in
the future, although we can provide no assurance in this regard. This
conclusion is based, in part, on interpretations of existing law that we
believe are reasonable, but which have not been approved by any taxing
authority. A company is considered a passive foreign investment company for any
taxable year if either:
. at least 75% of its gross income is passive income; or
. at least 50% of the value of its assets is attributable to assets
that produce or are held for the production of passive income.
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The 50% of value test is based on the average of the value of our assets
for each quarter during the taxable year. If we own at least 25% by value of
another company's stock, we will be treated as owning our proportionate share
of the assets and earning our proportionate share of the income of that
company. The determination of whether we are a passive foreign investment
company is made annually. Accordingly, it is possible that we may become a
passive foreign investment company in the current or any future taxable year
due to changes in our asset or income composition.
If we are a passive foreign investment company for any taxable year during
which you hold shares of preferred stock or shares of common stock, unless you
make a "QEF election" or a "mark to market election" as described below, you
will be subject to special tax rules with respect to any "excess distribution"
that you receive and any gain you realize from a sale or other disposition,
including a pledge, of the shares of preferred stock or shares of common
stock. Distributions you receive in a taxable year that are greater than 125%
of the average annual distributions you received during the shorter of the
three preceding taxable years or your holding period for the shares of
preferred stock or shares of common stock will be treated as excess
distributions. Under these special tax rules:
. the excess distribution or gain will be allocated ratably over
your holding period for the shares of preferred stock or shares of
common stock;
. the amount allocated to the current taxable year, and any taxable
year before the first taxable year in which we were a passive
foreign investment company, will be treated as ordinary income;
and
. the amount allocated to each other year will be subject to tax at
the highest tax rate in effect for that year and the interest
charge generally applicable to underpayments of tax will be
imposed on the resulting tax attributable to each such year.
If you hold shares of preferred stock or shares of common stock in any year
in which we are a passive foreign investment company, you are required to file
Internal Revenue Service Form 8621.
The special passive foreign investment company tax rules described above
will not apply to you if you elect to have us treated as a "qualified electing
fund", which we call a "QEF election", and we provide certain information to
you. If we are treated as a passive foreign investment company, we intend to
notify you and to provide to you such information as may be required for you
to make the QEF election effective.
If you make a QEF election, you will be taxable currently on your pro rata
share of our ordinary earnings and net capital gain, at ordinary income and
capital gain rates, respectively, for each taxable year during which we are
treated as a passive foreign investment company, regardless of whether or not
you receive distributions, so that you may recognize taxable income without
the corresponding receipt of cash from us with which to pay your resulting tax
obligation. Your basis in the shares of preferred stock or shares of common
stock will be increased to reflect taxed but undistributed income.
Distributions of income that had previously been taxed will result in a
corresponding reduction of basis in the shares of preferred stock or shares of
common stock and will not be taxed again as a distribution to you.
Alternatively, if you own shares of preferred stock or shares of common
stock and such stock is treated as "marketable stock", you may make a mark to
market election. If you make such an election, you will not be subject to the
passive foreign investment company rules described above. Instead, in general,
you will include in income each year as ordinary income the excess, if any, of
the fair market value of your marketable stock at the end of the taxable year
over its adjusted basis and will be permitted an ordinary loss in respect of
the excess, if any, of the adjusted basis of such stock over its fair market
value at the end of the taxable year, but only to the extent of the net amount
previously included in income as a result of the mark to market election. Your
basis in the marketable stock will be adjusted to reflect any such income or
loss amounts. Any gain or loss on the sale of the marketable stock will be
ordinary income or loss, except that such loss will be ordinary
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loss only to the extent of the previously included net mark to market gain. The
mark to market election is only available with respect to stock that is
regularly traded on certain United States exchanges and other exchanges
designated by the United States Treasury. The meaning of the term "regularly
traded" for purposes of the mark to market election is unclear.
You should consult your own tax advisors concerning the United States
federal income tax consequences of holding shares of preferred stock or shares
of common stock if we are considered a passive foreign investment company in
any taxable year, including the advisability and availability of making any of
the foregoing elections.
Foreign Personal Holding Company
If we or one of our non-United States subsidiaries were classified as a
foreign personal holding company, you would be required, regardless of your
percentage ownership, to include in income, as a dividend, your pro rata share
of our, or our relevant non-United States subsidiary's, undistributed foreign
personal holding company income, generally, taxable income with certain
adjustments, if you held shares of preferred stock or shares of common stock on
the last day of our taxable year, or if earlier, the last day on which we
satisfied the shareholder test described below. In addition, if we were
classified as a foreign personal holding company, and you acquired shares of
preferred stock or shares of common stock from a decedent, you would not
receive a "stepped-up" basis in that stock. Instead, you would have a tax basis
equal to the lower of the fair market value of those shares of preferred stock
or shares of common stock or the decedent's basis in them.
A foreign corporation will be classified as a foreign personal holding
company if (1) at any time during the corporation's taxable year, five or fewer
individuals, who are United States citizens or residents, directly or
indirectly own more than 50% of the corporation's stock, by either voting power
or value--we call this the "shareholder test"--and (2) the corporation receives
at least 60% of its gross income, 50% after the initial year of qualification,
as adjusted, for the taxable year from certain passive sources--we call this
the "income test". It is possible that we and our non-United States
subsidiaries could meet the shareholder test in a given taxable year. It is
also possible that we or one of our non-United States subsidiaries would meet
the income test in a given year and would be treated as a foreign personal
holding company. We intend to manage our affairs so as to attempt to avoid or
minimize having income imputed to you under these rules, to the extent such
management of our affairs is consistent with our business goals, although there
can be no assurance in this regard.
Personal Holding Company
A corporation classified as a personal holding company is subject to a 39.6%
tax on its undistributed personal holding company income. Foreign corporations
determine their liability for personal holding company tax by considering only
(1) gross income derived from United States sources and (2) gross income that
is effectively connected with a United States trade or business. A corporation
will be classified as a personal holding company if (1) at any time during the
last half of the corporation's taxable year, five or fewer individuals own more
than 50% of the corporation's stock, by value, directly or indirectly and (2)
the corporation receives at least 60% of its gross income, as adjusted, from
certain passive sources. However, if a corporation is a foreign personal
holding company or a passive foreign investment company, it cannot be a
personal holding company. It is possible that we and our subsidiaries could
meet the personal holding company shareholder test in a given taxable year. It
is also possible that we or one of our subsidiaries would meet the income test
in a given year and would be treated as a personal holding company. We intend
to manage our affairs so as to attempt to avoid or minimize the imposition of
the personal holding company tax, to the extent such management of our affairs
is consistent with our business goals, although there can be no assurance in
this regard.
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Controlled Foreign Corporations
For the purposes of this paragraph, we will refer to United States persons
that own, or are deemed for United States federal income tax purposes to own,
under complex attribution and constructive ownership rules, 10% or more of our
voting stock or the voting stock of any of our non-United States subsidiaries
as "10% shareholders". If 10% shareholders own, in the aggregate, more than
50%, measured by voting power or value, of our shares or the shares of any of
our non-United States subsidiaries, directly, indirectly, or by attribution, we
or any such non-United States subsidiary would be a controlled foreign
corporation. If characterized as controlled foreign corporations, then a
portion of our undistributed income may be includible in the taxable income of
our 10% shareholders, and all or a portion of the gain recognized by those 10%
shareholders on the disposition of their shares, which could otherwise qualify
for capital gains treatment, may be converted into ordinary dividend income. It
is possible that we and our non-United States corporate subsidiaries may be
controlled foreign corporations or may become controlled foreign corporations
in the future. However, as discussed above, controlled foreign corporation
status generally only has potentially adverse consequences to 10% shareholders.
Information Reporting and Backup Withholding
In general, unless you are an exempt recipient such as a corporation,
information reporting will apply to dividends in respect of the shares of
preferred stock or the proceeds received on the sale, exchange, or redemption
of the shares of preferred stock paid to you within the United States and in
some cases, outside of the United States. Additionally, if you fail to provide
your taxpayer identification number, or fail either to report in full dividend
and interest income or to make certain certifications, you will be subject to
backup withholding at the rate of 31%. Any amounts withheld under the backup
withholding rules will be allowed as a refund or a credit against your United
States federal income tax liability, provided you furnish the required
information to the United States Internal Revenue Service.
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SELLING SHAREHOLDERS
We originally issued and sold the shares of preferred stock in December 1999
to Salomon Smith Barney Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co., Chase Securities Inc., Morgan Stanley Dean
Witter & Co., CIBC World Markets Corp., Donaldson, Lufkin & Jenrette Securities
Corporation and Credit Suisse First Boston Corporation in a private placement.
These initial purchasers then resold the shares of preferred stock in
transactions exempt from the registration requirements of the Securities Act in
the United States to qualified institutional buyers within the meaning of Rule
144A under the Securities Act.
The selling shareholders listed below may, under this prospectus, from time
to time offer and sell the number of shares of preferred stock listed below
opposite their names and the number of shares of common stock into which their
shares of preferred stock may be converted also listed below opposite their
names.
<TABLE>
<CAPTION>
Number of Shares Number of Shares
Selling Shareholders of Preferred Stock of Common Stock
- -------------------- ------------------ ----------------
<S> <C> <C>
Oppenheimer Convertible Securities Fund... 50,000 234,740.00
CALAMOS Market Neutral Fund--CALAMOS
Investment Trust.......................... 400 1,877.92
First Franklin Convertible Securities
Fund...................................... 12,000 56,337.60
The TCW Group, Inc. ...................... 54,985 258,143.58
Employee Benefit Convertible Securities
Fund...................................... 1,100 5,164.28
Nations Capital Income Fund............... 16,000 75,116.80
Pacific Innovations Trust Capital Income
Fund...................................... 1,200 5,633.76
J & W Seligman & Co., Inc. ............... 39,025 183,214.57
</TABLE>
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PLAN OF DISTRIBUTION
The selling shareholders named on page 63 may from time to time sell their
shares of preferred stock and the common stock covered by this prospectus to
purchasers directly. Alternatively, the selling shareholders may from time to
time offer their shares of preferred stock and common stock through brokers,
dealers or agents who may receive compensation in the form of discounts,
concessions or commissions from the selling shareholders or the purchasers of
those shares for whom they may act as agent.
In addition, we may sell from time to time shares of common stock covered by
this prospectus to pay cash dividends on the shares of preferred stock. We may
sell those shares to purchasers directly or through brokers, dealers or agents
who may receive compensation in the form of discounts, concessions or
commissions from us or the purchasers of those shares for whom they may act as
agent.
The selling shareholders and any such brokers, dealers or agents who
participate in the distribution of shares of preferred stock or common stock as
described in the previous paragraph may be deemed to be "underwriters", and any
profits on the sale of those shares by them and any discounts, commissions or
concessions received by those brokers, dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act. If the selling
shareholders are deemed to be underwriters, the selling shareholders may be
subject to statutory liabilities of the Securities Act, including Sections 11,
12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.
The shares of preferred stock and common stock covered by this prospectus
may be sold from time to time by us, the selling shareholders or, if permitted,
by pledgees, donees, transferees or other successors in interest. Those shares
may be disposed of from time to time in one or more transactions through any
one or more of the following:
. a block trade, in which the broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
. purchases by a broker or dealer principal and resale by the broker or
dealer for its account;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
. an exchange distribution in accordance with the rules of the exchange
or transactions in the over-the-counter market;
. the writing of options on the shares;
. by the purchasers directly;
. sales through underwriters or dealers who may receive compensation in the
form of underwriting discounts, concessions or commissions from the
selling shareholders or successors in interest or from the purchasers of
the shares for whom they may act as agent; and
. the pledge of the shares as security for any loan or obligation,
including pledges to brokers or dealers who may, from time to time,
themselves effect distributions of the shares or interests in the shares.
In addition, the shares of common stock and preferred stock covered by this
prospectus may be sold in private transactions or under Rule 144 rather than
under this prospectus.
We cannot assure you that any selling shareholder will sell any or all of
its shares under this prospectus or that any selling shareholder will not
transfer, devise or gift its shares by other means not described in this
prospectus.
Those sales may be made at prices and at terms then prevailing or at prices
related to the then current market price or at negotiated prices and terms. In
effecting sales, brokers or dealers may arrange for other brokers or dealers to
participate.
In the event of any such offering, we will distribute a revised prospectus
or prospectus supplement, if required, which will provide the aggregate amount
and type of shares being offered and the terms of the offering, including the
name or names of any underwriters, dealers or agents or any discounts,
commissions
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and other items constituting compensation from the selling shareholders or us
and any discounts, commissions or concessions allowed or reallowed or paid to
dealers. We will file that prospectus supplement and, if necessary, a post-
effective amendment to the registration statement of which this prospectus is a
part, with the SEC to reflect the disclosure of additional information with
respect to the distribution of those shares.
To the best of our knowledge, there are currently no plans, arrangements or
understandings between any selling shareholders and any broker, dealer, agent
or underwriter regarding the sale by any selling shareholder of shares of
preferred stock or common stock covered by this prospectus.
The selling shareholders and any other person participating in the
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including Regulation M which may limit
the timing of purchases and sales of any shares by the selling shareholders and
any other such person. Furthermore, under Regulation M under the Exchange Act,
any person engaged in the distribution of the shares may not simultaneously
engage in market-making activities with respect to the particular shares being
distributed for certain periods before the commencement of the distribution.
All of the above may affect the marketability of the shares and the ability of
any person or entity to engage in market-making activities with respect to the
shares.
Under the terms of the registration rights agreement, holders of securities
covered by a shelf registration statement, on the one hand, and us, on the
other hand, have agreed to indemnify each other against certain liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection with those liabilities.
Under the registration rights agreement, we have agreed to pay substantially
all expenses of the registration, offering and sale of the shares of preferred
stock and common stock covered by this prospectus to the public, including SEC
filing fees and expenses of compliance with state securities or "blue sky"
laws. However, the selling shareholders will pay all underwriting discounts,
selling commissions and related fees, if any.
65
<PAGE>
LEGAL MATTERS
Certain Bermuda legal matters with respect to the securities will be passed
upon for us by Appleby, Spurling & Kempe. As of January 14, 2000, lawyers of
Appleby, Spurling & Kempe who have participated in the preparation of this
document beneficially owned approximately 4,000 shares of our common stock.
EXPERTS
The consolidated financial statements of Global Crossing and its
subsidiaries incorporated by reference in this prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen & Co., independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements incorporated by reference in this
Registration Statement of which this prospectus is a part to the Annual Report
on Form 10-K of Frontier Corporation for the year ended December 31, 1998 and
audited historical financial statements included on pages 22-42 of Frontier
Corporation's Form 8-K dated January 26, 1999, have been so incorporated in
reliance on the reports of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
The combined financial statements of Global Marine Systems incorporated by
reference in this prospectus have been audited by KPMG Audit Plc, chartered
accountants, as stated in their report incorporated by reference in this
prospectus, in reliance upon the authority of said firm as experts in
accounting and auditing.
The financial statements of Racal Telecom and its subsidiaries incorporated
by reference in this registration statement of which this prospectus is a part
have been audited by Deloitte & Touche, independent auditors, as stated in
their report incorporated by reference in this registration statement of which
this prospectus is a part.
The consolidated financial statements incorporated by reference in this
registration statement of which this prospectus is a part of HCL Holdings
Limited and subsidiaries have been so incorporated in reliance on the reports
of PricewaterhouseCoopers, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES
We are organized under the laws of Bermuda. In addition, a number of our
directors and officers reside outside of the United States and a substantial
portion of our assets are located outside of the United States. As a result, it
may be difficult for you to effect service of process within the United States
upon those persons or to realize against them in courts of the United States
upon judgments of courts of the United States predicated upon civil liabilities
under the United States federal securities laws. Furthermore, our Bermuda
counsel, Appleby Spurling & Kempe, has advised us that there is doubt as to the
enforcement in Bermuda, in original actions or in actions of enforcement of
judgments of United States courts, of liabilities predicated upon United States
federal securities laws, although Bermuda courts will enforce foreign judgments
for liquidated amounts in civil matters subject to some conditions and
exceptions.
66
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2,600,000 Shares of 7% Cumulative Convertible Preferred Stock
and
13,006,480 Shares of Common Stock
GLOBAL CROSSING LOGO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution.
The registrant estimates that expenses in connection with the offering
described in this Registration Statement will be as follows:
<TABLE>
<S> <C>
SEC registration fee.......................................... $
NASD filing fee...............................................
Nasdaq National Market listing fee............................
Bermuda Stock Exchange listing fee............................
Printing and engraving expenses...............................
Accounting fees and expenses..................................
Blue Sky fees and expenses....................................
Transfer agent and registrar fees.............................
Miscellaneous.................................................
---
Total....................................................... $
</TABLE>
Item 15. Indemnification of Directors and Officers.
The Bye-laws of the Registrant provide for indemnification of the
Registrant's officers and directors against all liabilities, loss, damage or
expense incurred or suffered by such party as an officer or director of the
Registrant; provided that such indemnification shall not extend to any matter
which would render it void pursuant to the Companies Act of 1981 as in effect
from time to time in Bermuda.
The Companies Act provides that a Bermuda company may indemnify its
directors in respect of any loss arising or liability attaching to them as a
result of any negligence, default, breach of duty or breach of trust of which
they may be guilty. However, the Companies Act also provides that any
provision, whether contained in the company's bye-laws or in a contract or
arrangement between the company and the director, indemnifying a director
against any liability which would attach to him in respect of his fraud or
dishonesty will be void.
The directors and officers of the Registrant are covered by directors' and
officers' insurance policies maintained by the Registrant.
Item 16. Exhibits.
The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 16, 1999 (the
"Frontier Merger Agreement"), among the Registrant, Frontier
Corporation and GCF Acquisition Corp. (incorporated by reference to
Exhibit 2 to the Registrant's Current Report on Form 8-K filed on
March 19, 1999 (the "March 19, 1999 8-K")).
2.2 Consent and Amendment No. 1 to the Frontier Merger Agreement, dated as
of May 16, 1999, among the Registrant, GCF Acquisition Corp. and
Frontier Corporation (incorporated by reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K filed on May 18, 1999 (the
"May 18, 1999 8-K")).
2.3 Amendment No. 2 to the Frontier Merger Agreement, dated as of
September 2, 1999, among the Registrant, GCF Acquisition Corp. and
Frontier Corporation (incorporated by reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K filed on September 3, 1999
(the "September 3, 1999 8-K")).
2.4 Sale and Purchase Agreement, dated as of April 26, 1999, between Cable
& Wireless plc and the Registrant (incorporated by reference to
Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on
July 16, 1999 (the "July 16, 1999 8-K")).
2.5 Amendment to the Sale and Purchase Agreement, dated as of June 25,
1999, between Cable & Wireless plc and the Registrant (incorporated by
reference to Exhibit 2.2 to the July 16, 1999 8-K).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
2.6 Agreement and Plan of Merger, dated as of May 16, 1999, between the
Registrant and U S West, Inc. (incorporated by reference to Exhibit 2
to the Registrant's Current Report on Form 8-K filed on May 21, 1999
(the "May 21, 1999 8-K")).
2.7 Letter Agreement, dated as of May 16, 1999, between the Registrant and
U S West, Inc. (incorporated by reference to Exhibit 99 to the May 21,
1999 8-K).
2.8 Termination Agreement, dated as of July 18, 1999, between the
Registrant and U S West, Inc. (incorporated by reference to Exhibit
10.1 to the Registrant's Current Report on Form 8-K filed on July 20,
1999 (the "July 20, 1999 8-K")).
3.1 Memorandum of Association of the Registrant (incorporated by reference
to Exhibit 3.1 to the Registrant's Registration Statement on Form S-
1/A filed on July 2, 1998 (the "July 2, 1998 S-1/A")).
3.2 Certificate of Incorporation of Change of Name of the Registrant dated
April 30, 1998 (incorporated by reference to Exhibit 3.3 to the
Registrant's Registration Statement on Form S-1/A filed on July 23,
1998 (the "July 23, 1998 S-1/A")).
3.3 Memorandum of Increase of Share Capital of the Registrant dated July
9, 1998 (incorporated by reference to Exhibit 3.4 to the July 23, 1998
S-1/A).
3.4 Memorandum of Increase of Share Capital of the Registrant dated
September 27, 1999 (incorporated by reference to Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q filed on November 15, 1999
(the "November 15, 1999 10-Q")).
3.5 Bye-laws of the Registrant as in effect on October 14, 1999
(incorporated by reference to Exhibit 3.2 to the November 15, 1999 10-
Q).
3.6 Certificate of Designations of 6 3/8% Cumulative Convertible Preferred
Stock of the Registrant dated November 5, 1999 (incorporated by
reference to Exhibit 3.3 to the November 15, 1999 10-Q).
3.7 Certificate of Designations of 7% Cumulative Convertible Preferred
Stock of the Registrant, dated December 15, 1999 (incorporated by
reference to Exhibit 3.9 to the Global Crossing Holdings Ltd.
Registration Statement on Form S-4 filed on January 11, 2000 (File No.
333-94449)).
4.1 Certificate of Designations of 10 1/2% Senior Exchangeable Preferred
Stock Due 2008 of Global Crossing Holdings Ltd. dated December 1, 1998
(incorporated by reference to Schedule A to Exhibit 3.2 to the Global
Crossing Holdings Ltd. Registration Statement on Form S-4 filed on
December 22, 1998.)
4.2 Indenture, dated as of May 18, 1998, between Global Crossing Holdings
Ltd. and United States Trust Company of New York, as Trustee
(incorporated by reference to Exhibit 4.2 to the Global Crossing
Holdings Ltd. Registration Statement on Form S-4 filed on December 22,
1998).
4.3 Supplemental Indenture, dated as of June 25, 1999, between Global
Crossing Holdings Ltd. and United States Trust Company of New York, to
the Indenture dated as of May 18, 1998 (incorporated by reference to
Exhibit 4.4 to the Registrant's Registration Statement on Form S-4
filed on July 12, 1999).
4.4 Credit Agreement, dated as of July 2, 1999, among the Registrant,
Global Crossing Holdings Ltd., the Lenders party thereto and The Chase
Manhattan Bank as Administrative Agent (incorporated by reference to
Exhibit 10.7 to the Registrant's Registration Statement on Form S-4/A
filed on August 5, 1999).
4.5 Indenture, dated as of November 19, 1999, among Global Crossing Ltd.,
Global Crossing Holdings Ltd. and United States Trust Company of New
York (incorporated by reference to Exhibit 4.5 to the Global Crossing
Holdings Ltd. Registration Statement on Form S-4 filed on January 11,
2000 (File No. 333-94449)).
Except as hereinabove provided, there is no instrument with respect to
long-term debt of the Registrant and its consolidated subsidiaries
under which the total authorized amount exceeds 10 percent of the
total consolidated assets of the Registrant. The Registrant agrees to
furnish to the SEC upon its request a copy of any instrument relating
to long-term debt.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
5.1 Opinion of Appleby, Spurling & Kempe (to be filed by amendment).
10.1 Project Development and Construction Contract, dated as of March 18,
1997, among AT&T Submarine Systems, Inc. and Atlantic Crossing Ltd.
(formerly Global Telesystems Ltd.) (incorporated by reference to
Exhibit 10.2 to the July 23, 1998 S-1/A).
10.2 Project Development and Construction Contract, dated as of April 21,
1998, among Tyco Submarine Systems, Ltd. and Pacific Crossing Ltd.
(incorporated by reference to Exhibit 10.3 to the July 23, 1998 S-
1/A).
10.3 Project Development and Construction Contract, dated as of June 2,
1998, among Alcatel Submarine Networks and Mid-Atlantic Crossing Ltd.
(incorporated by reference to Exhibit 10.4 to the July 23, 1998 S-
1/A).
10.4 Project Development and Construction Contract, dated as of July 21,
1998, among Tyco Submarine Systems, Ltd. and Pan American Crossing
Ltd. (incorporated by reference to Exhibit 10.5 to the Registrant's
Quarterly Report on Form 10-Q filed on November 16, 1998).
10.5 Project Development and Construction Contract, dated as of July 30,
1999, among Alcatel Submarine Networks and South American Crossing
Ltd. (incorporated by reference to Exhibit 10.5 to the Global Crossing
Holdings Ltd. Registration Statement on Form S-4 filed on January 11,
2000 (File No. 333-94449)).
10.6 Lease made as of October 1, 1999 between North Crescent Realty V, LLC
and Global Crossing Development Company (incorporated by reference to
Exhibit 10.1 to the November 15, 1999 10-Q).
10.7 Form of Stockholders Agreement dated as of August 12, 1998 among the
Registrant and the investors named therein (incorporated by reference
to Exhibit 9.1 to the July 23, 1998 S-1/A).
10.8 Form of Registration Rights Agreement dated as of August 12, 1998
among the Registrant and the investors named therein (incorporated by
reference to Exhibit 4.4 to the July 23, 1998 S-1/A).
10.9 Voting Agreement, dated as of March 16, 1999, among certain
shareholders of the Registrant parties thereto, Frontier Corporation
and, for certain purposes only, the Registrant (incorporated by
reference to Exhibit 10.2 to the March 19, 1999 8-K).
10.10 Second Reaffirmation of Voting Agreement and Share Transfer
Restriction Agreement, dated as of September 2, 1999 (incorporated by
reference to Annex S-B to the joint proxy statement/prospectus
supplement included in the Registrant's Registration Statement on Form
S-4 filed on September 8, 1999 (the "September 8, 1999 S-4").
10.11 Share Transfer Restriction Agreement, dated as of September 2, 1999,
among certain shareholders of Global Crossing Ltd., certain
shareholders of Frontier Corporation and Global Crossing Ltd.
(incorporated by reference to Annex S-C to the joint proxy
statement/prospectus supplement included in the September 8, 1999 S-
4).
10.12 Tender Offer and Purchase Agreement, dated as of May 16, 1999, between
the Registrant and U S WEST, Inc. (incorporated by reference to
Exhibit (c)(2) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21,
1999).
10.13 Standstill Agreement dated as of May 16, 1999 between U S WEST, Inc.
and the Registrant (incorporated by reference to Exhibit (c)(4) to U S
WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.14 Voting Agreement dated as of May 16, 1999 between U S WEST, Inc. and
the Registrant (incorporated by reference to Exhibit (c)(3) to U S
WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
10.15 Tender and Voting Agreement dated as of May 16, 1999 among U S WEST,
Inc., the Registrant and the shareholders party thereto (incorporated
by reference to Exhibit (c)(5) to U S WEST, Inc.'s Schedule 14D-1
filed on May 21, 1999).
10.16 Agreement dated as of May 16, 1999 among the Registrant and the
shareholders party thereto (incorporated by reference to Exhibit
(c)(6) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.17 Transfer Agreement dated as of May 16, 1999 among the Registrant and
the shareholders party thereto (incorporated by reference to Exhibit
(c)(8) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.18 Amendment No. 1 dated as of July 18, 1999 to Tender Offer and Purchase
Agreement dated as of May 16 1999 between the Registrant and U S WEST,
Inc. (incorporated by reference to Exhibit 10.2 to the July 20, 1999
8-K).
10.19 Agreement, dated as of July 18, 1999, between Qwest Communications
International Inc. and the Registrant (incorporated by reference to
Exhibit 10.3 to the July 20, 1999 8-K).
10.20 Agreement, dated as of July 18, 1999, between Global Crossing Holdings
Ltd. and Qwest Communications International Inc. (incorporated by
reference to Exhibit 10.4 to the July 20, 1999 8-K).
10.21 Registration Rights Agreement, dated as of December 15, 1999, among
the Registrant and the initial purchasers of the Registrant's 7%
Cumulative Convertible Preferred Stock named therein (filed herewith).
10.22 1998 Global Crossing Ltd. Stock Incentive Plan, as amended and
restated effective December 7, 1999 (incorporated by reference to
Exhibit 10.21 to the Global Crossing Holdings Ltd. Registration
Statement on Form S-4 filed on January 11, 2000 (File No. 333-94449)).
10.23 Form of Non-Qualified Stock Option Agreement as in effect on September
30, 1999 (incorporated by reference to Exhibit 10.2 to the November
15, 1999 10-Q).
10.24 Frontier Corporation Supplemental Retirement Savings Plan as amended
and restated effective January 1, 1996 (incorporated by reference to
Exhibit 10.13 to Frontier Corporation's Annual Report on Form 10-K
filed March 28, 1997).
10.25 Amendment No. 1, effective March 16, 1999, to Frontier Corporation
Supplemental Retirement Savings Plan (incorporated by reference to
Exhibit 10.2 to Frontier Corporation's Quarterly Report on Form 10-Q
filed August 3, 1999).
10.26 Amendment No. 2, dated September 21, 1999, to Frontier Corporation
Supplemental Retirement Savings Plan (incorporated by reference to
Exhibit 10.5 to the November 15, 1999 10-Q).
10.27 Employment Agreement dated as of February 19, 1999 between the
Registrant and Robert Annunziata (incorporated by reference to Exhibit
10.8 to the Registrant's Quarterly Report on Form 10-Q filed on May
10, 1999).
10.28 Executive Contract dated March 25, 1996 between Robert L. Barrett and
Frontier Corporation (incorporated by reference to Exhibit 10.25 to
Frontier Corporation's Quarterly Report on Form 10-Q filed May 14,
1996).
10.29 Amendment dated May 1, 1999 to Executive Contract between Robert L.
Barrett and Frontier Corporation (incorporated by reference to Exhibit
10.7 to the November 15, 1999 10-Q).
10.30 Executive Contract dated January 1, 1998 between Joseph P. Clayton and
Frontier Corporation (incorporated by reference to Exhibit 10.22 to
Frontier Corporation's Annual Report on Form 10-K filed March 26,
1998).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
10.31 Amendment dated May 1, 1999 to Executive Contract between Joseph P.
Clayton and Frontier Corporation (incorporated by reference to Exhibit
10.9 to the November 15, 1999 10-Q).
10.32 Sale Agreement, dated October 10, 1999, among Controls and
Communications Limited, The Racal Corporation, Racal Electronics plc
and the Registrant (incorporated by reference to Exhibit 2.1 of the
Registrant's Current Report on Form 8-K filed on October 21, 1999).
10.33 Subscription and Sale and Purchase Agreement, dated November 15, 1999,
among Hutchison Whampoa Limited, Hutchison Telecommunications Limited,
the Registrant and HCL Holdings Limited (incorporated by reference to
Exhibit 10.33 to the Global Crossing Holdings Ltd. Registration
Statement on Form S-4 filed on January 11, 2000 (File No. 333-94449)).
Statement of Computation of Earnings to Fixed Charges (filed
12.1 herewith).
21.1 Subsidiaries of the Registrant (filed herewith).
23.1 Consent of Arthur Andersen & Co. (filed herewith).
23.2 Consent of PricewaterhouseCoopers LLP (filed herewith).
23.3 Consent of KPMG Audit Plc (filed herewith).
23.4 Consent of Deloitte & Touche (filed herewith).
23.5 Consent of PricewaterhouseCoopers (filed herewith).
23.6 Consent of Appleby, Spurling & Kempe (included in Exhibit 5.1).
24.1 Power of Attorney of the Registrant (included on signature page II-7
of this Registration Statement).
</TABLE>
Item 17. Undertakings.
(1) The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(d) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
II-5
<PAGE>
(e) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on January 18,
2000.
Global Crossing Ltd.
By: /s/ Robert Annunziata
----------------------------------
Name: Robert Annunziata
Title: Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints each of Robert Annunziata
and Dan Cohrs, severally, as his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and anything appropriate or necessary to be done, as fully and for
all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent or his substitute or
substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Gary Winnick Chairman of the Board and January 18, 2000
___________________________________________ Director
Gary Winnick
/s/ Lodwrick M. Cook Co-Chairman of the Board January 18, 2000
___________________________________________ and Director
Lodwrick M. Cook
/s/ Thomas J. Casey Managing Director, Vice January 18, 2000
___________________________________________ Chairman of the Board and
Thomas J. Casey Director
/s/ Jack M. Scanlon Vice Chairman of the Board January 18, 2000
___________________________________________ and Director
Jack M. Scanlon
/s/ Robert Annunziata Chief Executive Officer January 18, 2000
___________________________________________ and Director
Robert Annunziata
/s/ David L. Lee President, Chief Operating January 18, 2000
___________________________________________ Officer and Director
David L. Lee
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Barry Porter Senior Vice President and January 18, 2000
___________________________________________ Director
Barry Porter
/s/ Abbott L. Brown Senior Vice President and January 18, 2000
___________________________________________ Director
Abbott L. Brown
/s/ Dan J. Cohrs Senior Vice President and January 18, 2000
___________________________________________ Chief Financial Officer
Dan J. Cohrs (principal financial
officer and principal
accounting officer)
/s/ Jay R. Bloom Director January 18, 2000
___________________________________________
Jay R. Bloom
/s/ William E. Conway Director January 18, 2000
___________________________________________
William E. Conway
/s/ Dean C. Kehler Director January 18, 2000
___________________________________________
Dean C. Kehler
/s/ Geoffrey J.W. Kent Director January 18, 2000
___________________________________________
Geoffrey J.W. Kent
/s/ Bruce Raben Director January 18, 2000
___________________________________________
Bruce Raben
/s/ Michael R. Steed Director January 18, 2000
___________________________________________
Michael R. Steed
/s/ Hillel Weinberger Director January 18, 2000
___________________________________________
Hillel Weinberger
/s/ James F. McDonald Director January 18, 2000
___________________________________________
James F. McDonald
/s/ Eric Hippeau Director January 18, 2000
___________________________________________
Eric Hippeau
/s/ Joseph P. Clayton Director January 18, 2000
___________________________________________
Joseph P. Clayton
/s/ Douglas H. McCorkindale Director January 18, 2000
___________________________________________
Douglas H. McCorkindale
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of March 16, 1999 (the
"Frontier Merger Agreement"), among the Registrant, Frontier
Corporation and GCF Acquisition Corp. (incorporated by reference to
Exhibit 2 to the Registrant's Current Report on Form 8-K filed on
March 19, 1999 (the "March 19, 1999 8-K")).
2.2 Consent and Amendment No. 1 to the Frontier Merger Agreement, dated as
of May 16, 1999, among the Registrant, GCF Acquisition Corp. and
Frontier Corporation (incorporated by reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K filed on May 18, 1999 (the
"May 18, 1999 8-K")).
2.3 Amendment No. 2 to the Frontier Merger Agreement, dated as of
September 2, 1999, among the Registrant, GCF Acquisition Corp. and
Frontier Corporation (incorporated by reference to Exhibit 2 to the
Registrant's Current Report on Form 8-K filed on September 3, 1999
(the "September 3, 1999 8-K")).
2.4 Sale and Purchase Agreement, dated as of April 26, 1999, between Cable
& Wireless plc and the Registrant (incorporated by reference to
Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on
July 16, 1999 (the "July 16, 1999 8-K")).
2.5 Amendment to the Sale and Purchase Agreement, dated as of June 25,
1999, between Cable & Wireless plc and the Registrant (incorporated by
reference to Exhibit 2.2 to the July 16, 1999 8-K).
2.6 Agreement and Plan of Merger, dated as of May 16, 1999, between the
Registrant and U S West, Inc. (incorporated by reference to Exhibit 2
to the Registrant's Current Report on Form 8-K filed on May 21, 1999
(the "May 21, 1999 8-K")).
2.7 Letter Agreement, dated as of May 16, 1999, between the Registrant and
U S West, Inc. (incorporated by reference to Exhibit 99 to the May 21,
1999 8-K).
2.8 Termination Agreement, dated as of July 18, 1999, between the
Registrant and U S West, Inc. (incorporated by reference to Exhibit
10.1 to the Registrant's Current Report on Form 8-K filed on July 20,
1999 (the "July 20, 1999 8-K")).
3.1 Memorandum of Association of the Registrant (incorporated by reference
to Exhibit 3.1 to the Registrant's Registration Statement on Form S-
1/A filed on July 2, 1998 (the "July 2, 1998 S-1/A")).
3.2 Certificate of Incorporation of Change of Name of the Registrant dated
April 30, 1998 (incorporated by reference to Exhibit 3.3 to the
Registrant's Registration Statement on Form S-1/A filed on July 23,
1998 (the "July 23, 1998 S-1/A")).
3.3 Memorandum of Increase of Share Capital of the Registrant dated July
9, 1998 (incorporated by reference to Exhibit 3.4 to the July 23, 1998
S-1/A).
3.4 Memorandum of Increase of Share Capital of the Registrant dated
September 27, 1999 (incorporated by reference to Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q filed on November 15, 1999
(the "November 15, 1999 10-Q")).
3.5 Bye-laws of the Registrant as in effect on October 14, 1999
(incorporated by reference to Exhibit 3.2 to the November 15, 1999 10-
Q).
3.6 Certificate of Designations of 6 3/8% Cumulative Convertible Preferred
Stock of the Registrant dated November 5, 1999 (incorporated by
reference to Exhibit 3.3 to the November 15, 1999 10-Q).
3.7 Certificate of Designations of 7% Cumulative Convertible Preferred
Stock of the Registrant, dated December 15, 1999 (incorporated by
reference to Exhibit 3.9 to the Global Crossing Holdings Ltd.
Registration Statement on Form S-4 filed on January 11, 2000 (File No.
333-94449)).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
4.1 Certificate of Designations of 10 1/2% Senior Exchangeable Preferred
Stock Due 2008 of Global Crossing Holdings Ltd. dated December 1, 1998
(incorporated by reference to Schedule A to Exhibit 3.2 to the Global
Crossing Holdings Ltd. Registration Statement on Form S-4 filed on
December 22, 1998.)
4.2 Indenture, dated as of May 18, 1998, between Global Crossing Holdings
Ltd. and United States Trust Company of New York, as Trustee
(incorporated by reference to Exhibit 4.2 to the Global Crossing
Holdings Ltd. Registration Statement on Form S-4 filed on December 22,
1998).
4.3 Supplemental Indenture, dated as of June 25, 1999, between Global
Crossing Holdings Ltd. and United States Trust Company of New York, to
the Indenture dated as of May 18, 1998 (incorporated by reference to
Exhibit 4.4 to the Registrant's Registration Statement on Form S-4
filed on July 12, 1999).
4.4 Credit Agreement, dated as of July 2, 1999, among the Registrant,
Global Crossing Holdings Ltd., the Lenders party thereto and The Chase
Manhattan Bank as Administrative Agent (incorporated by reference to
Exhibit 10.7 to the Registrant's Registration Statement on Form S-4/A
filed on August 5, 1999).
4.5 Indenture, dated as of November 19, 1999, among Global Crossing Ltd.,
Global Crossing Holdings Ltd. and United States Trust Company of New
York (incorporated by reference to Exhibit 4.5 to the Global Crossing
Holdings Ltd. Registration Statement on Form S-4 filed on January 11,
2000 (File No. 333-94449)).
Except as hereinabove provided, there is no instrument with respect to
long-term debt of the Registrant and its consolidated subsidiaries
under which the total authorized amount exceeds 10 percent of the
total consolidated assets of the Registrant. The Registrant agrees to
furnish to the SEC upon its request a copy of any instrument relating
to long-term debt.
5.1 Opinion of Appleby, Spurling & Kempe (to be filed by amendment).
10.1 Project Development and Construction Contract, dated as of March 18,
1997, among AT&T Submarine Systems, Inc. and Atlantic Crossing Ltd.
(formerly Global Telesystems Ltd.) (incorporated by reference to
Exhibit 10.2 to the July 23, 1998 S-1/A).
10.2 Project Development and Construction Contract, dated as of April 21,
1998, among Tyco Submarine Systems, Ltd. and Pacific Crossing Ltd.
(incorporated by reference to Exhibit 10.3 to the July 23, 1998 S-
1/A).
10.3 Project Development and Construction Contract, dated as of June 2,
1998, among Alcatel Submarine Networks and Mid-Atlantic Crossing Ltd.
(incorporated by reference to Exhibit 10.4 to the July 23, 1998 S-
1/A).
10.4 Project Development and Construction Contract, dated as of July 21,
1998, among Tyco Submarine Systems, Ltd. and Pan American Crossing
Ltd. (incorporated by reference to Exhibit 10.5 to the Registrant's
Quarterly Report on Form 10-Q filed on November 16, 1998).
10.5 Project Development and Construction Contract, dated as of July 30,
1999, among Alcatel Submarine Networks and South American Crossing
Ltd. (incorporated by reference to Exhibit 10.5 to the Global Crossing
Holdings Ltd. Registration Statement on Form S-4 filed on January 11,
2000
(File No. 333-94449)).
10.6 Lease made as of October 1, 1999 between North Crescent Realty V, LLC
and Global Crossing Development Company (incorporated by reference to
Exhibit 10.1 to the November 15, 1999 10-Q).
10.7 Form of Stockholders Agreement dated as of August 12, 1998 among the
Registrant and the investors named therein (incorporated by reference
to Exhibit 9.1 to the July 23, 1998 S-1/A).
10.8 Form of Registration Rights Agreement dated as of August 12, 1998
among the Registrant and the investors named therein (incorporated by
reference to Exhibit 4.4 to the July 23, 1998 S-1/A).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
- ------- -------------------
<S> <C>
10.9 Voting Agreement, dated as of March 16, 1999, among certain shareholders of the
Registrant parties thereto, Frontier Corporation and, for certain purposes only, the
Registrant (incorporated by reference to Exhibit 10.2 to the March 19, 1999 8-K).
10.10 Second Reaffirmation of Voting Agreement and Share Transfer Restriction Agreement,
dated as of September 2, 1999 (incorporated by reference to Annex S-B to the joint
proxy statement/prospectus supplement included in the Registrant's Registration
Statement on Form S-4 filed on September 8, 1999 (the "September 8, 1999 S-4").
10.11 Share Transfer Restriction Agreement, dated as of September 2, 1999, among certain
shareholders of Global Crossing Ltd., certain shareholders of Frontier Corporation
and Global Crossing Ltd. (incorporated by reference to Annex S-C to the joint proxy
statement/prospectus supplement included in the September 8, 1999 S-4).
10.12 Tender Offer and Purchase Agreement, dated as of May 16, 1999, between the
Registrant and U S WEST, Inc. (incorporated by reference to Exhibit (c)(2) to U S
WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.13 Standstill Agreement dated as of May 16, 1999 between U S WEST, Inc. and the
Registrant (incorporated by reference to Exhibit (c)(4) to U S WEST, Inc.'s Schedule
14D-1 filed on May 21, 1999).
10.14 Voting Agreement dated as of May 16, 1999 between U S WEST, Inc. and the Registrant
(incorporated by reference to Exhibit (c)(3) to U S WEST, Inc.'s Schedule 14D-1
filed on May 21, 1999).
10.15 Tender and Voting Agreement dated as of May 16, 1999 among U S WEST, Inc., the
Registrant and the shareholders party thereto (incorporated by reference to Exhibit
(c)(5) to U S WEST, Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.16 Agreement dated as of May 16, 1999 among the Registrant and the shareholders party
thereto (incorporated by reference to Exhibit (c)(6) to U S WEST, Inc.'s Schedule
14D-1 filed on May 21, 1999).
10.17 Transfer Agreement dated as of May 16, 1999 among the Registrant and the
shareholders party thereto (incorporated by reference to Exhibit (c)(8) to U S WEST,
Inc.'s Schedule 14D-1 filed on May 21, 1999).
10.18 Amendment No. 1 dated as of July 18, 1999 to Tender Offer and Purchase Agreement
dated as of May 16 1999 between the Registrant and U S WEST, Inc. (incorporated by
reference to Exhibit 10.2 to the July 20, 1999 8-K).
10.19 Agreement, dated as of July 18, 1999, between Qwest Communications International
Inc. and the Registrant (incorporated by reference to Exhibit 10.3 to the July 20,
1999 8-K).
10.20 Agreement, dated as of July 18, 1999, between Global Crossing Holdings Ltd. and
Qwest Communications International Inc. (incorporated by reference to Exhibit 10.4
to the July 20, 1999 8-K).
10.21 Registration Rights Agreement, dated as of December 15, 1999, among the Registrant
and the initial purchasers of the Registrant's 7% Cumulative Convertible Preferred
Stock named therein (filed herewith).
10.22 1998 Global Crossing Ltd. Stock Incentive Plan, as amended and restated effective
December 7, 1999 (incorporated by reference to Exhibit 10.21 to the Global Crossing
Holdings Ltd. Registration Statement on Form S-4 filed on January 11, 2000 (File No.
333-94449)).
10.23 Form of Non-Qualified Stock Option Agreement as in effect on September 30, 1999
(incorporated by reference to Exhibit 10.2 to the November 15, 1999 10-Q).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
10.24 Frontier Corporation Supplemental Retirement Savings Plan as amended and restated
effective January 1, 1996 (incorporated by reference to Exhibit 10.13 to Frontier
Corporation's Annual Report on Form 10-K filed March 28, 1997).
10.25 Amendment No. 1, effective March 16, 1999, to Frontier Corporation Supplemental
Retirement Savings Plan (incorporated by reference to Exhibit 10.2 to Frontier
Corporation's Quarterly Report on Form 10-Q filed August 3, 1999).
10.26 Amendment No. 2, dated September 21, 1999, to Frontier Corporation Supplemental
Retirement Savings Plan (incorporated by reference to Exhibit 10.5 to the November
15, 1999 10-Q).
10.27 Employment Agreement dated as of February 19, 1999 between the Registrant and Robert
Annunziata (incorporated by reference to Exhibit 10.8 to the Registrant's Quarterly
Report on Form 10-Q filed on May 10, 1999).
10.28 Executive Contract dated March 25, 1996 between Robert L. Barrett and Frontier
Corporation (incorporated by reference to Exhibit 10.25 to Frontier Corporation's
Quarterly Report on Form 10-Q filed May 14, 1996).
10.29 Amendment dated May 1, 1999 to Executive Contract between Robert L. Barrett and
Frontier Corporation (incorporated by reference to Exhibit 10.7 to the November 15,
1999 10-Q).
10.30 Executive Contract dated January 1, 1998 between Joseph P. Clayton and Frontier
Corporation (incorporated by reference to Exhibit 10.22 to Frontier Corporation's
Annual Report on Form 10-K filed March 26, 1998).
10.31 Amendment dated May 1, 1999 to Executive Contract between Joseph P. Clayton and
Frontier Corporation (incorporated by reference to Exhibit 10.9 to the November 15,
1999 10-Q).
10.32 Sale Agreement, dated October 10, 1999, among Controls and Communications Limited,
The Racal Corporation, Racal Electronics plc and the Registrant (incorporated by
reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed on
October 21, 1999).
10.33 Subscription and Sale and Purchase Agreement, dated November 15, 1999, among
Hutchison Whampoa Limited, Hutchison Telecommunications Limited, the Registrant and
HCL Holdings Limited (incorporated by reference to Exhibit 10.33 to the Global
Crossing Holdings Ltd. Registration Statement on Form S-4 filed on January 11, 2000
(File No. 333-94449)).
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges (filed herewith).
21.1 Subsidiaries of the Registrant (filed herewith).
23.1 Consent of Arthur Andersen & Co. (filed herewith).
23.2 Consent of PricewaterhouseCoopers LLP (filed herewith).
23.3 Consent of KPMG Audit Plc (filed herewith).
23.4 Consent of Deloitte & Touche (filed herewith).
23.5 Consent of PricewaterhouseCoopers (filed herewith).
23.6 Consent of Appleby, Spurling & Kempe (included in Exhibit 5.1).
24.1 Power of Attorney of the Registrant (included on signature page II-7 of this
Registration Statement).
</TABLE>
<PAGE>
EXECUTION COPY
================================================================================
Exhibit 10.21
REGISTRATION RIGHTS AGREEMENT
Dated as of December 15, 1999
by and among
Global Crossing Ltd.
and
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
Chase Securities Inc.
Morgan Stanley Dean Witter & Co.
CIBC World Markets Corp.
Donaldson, Lufkin & Jenrette Securities Corporation
Credit Suisse First Boston Corporation
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
---------
into as of December 15, 1999, by and among Global Crossing Ltd., a Bermuda
company (the "Company"), and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
-------
Salomon Smith Barney Inc., Goldman, Sachs & Co., Chase Securities Inc., Morgan
Stanley Dean Witter & Co., CIBC World Markets Corp., Donaldson, Lufkin &
Jenrette Securities Corporation and Credit Suisse First Boston Corporation
(each, an "Initial Purchaser" and, collectively, the "Initial Purchasers"), each
----------------- ------------------
of whom has agreed to purchase, severally and not jointly, an aggregate of
2,000,000 shares of the Company's 7% Cumulative Convertible Preferred Stock,
with the option to purchase up to an additional 600,000 shares of the Company's
7% Cumulative Convertible Preferred Stock, for the sole purpose of covering
over-allotments (collectively the "Preferred Stock") pursuant to the Purchase
---------------
Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated as of
December 9, 1999 (the "Purchase Agreement"), by and among the Company and the
------------------
Initial Purchasers. In order to induce the Initial Purchasers to purchase the
Preferred Stock, the Company has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers to purchase the Preferred
Stock as set forth in the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
---
Affiliate: As defined in Rule 144 of the Act.
---------
Bye-laws: The Bye-laws of the Company to be amended by the Company on or
--------
prior to the Closing Date, which will contain the terms of the Preferred Stock.
Certificate of Designations: The Certificate of Designations, to be
---------------------------
entered into by the Company governing the Preferred Stock, as such Certificate
of Designations is amended, modified or supplemented from time to time in
accordance with the terms thereof.
Closing Date: The date hereof.
------------
Commission: The Securities and Exchange Commission.
----------
Common Stock: The common stock, $0.01 par value, of the Company.
------------
Dividend Payment Date: As defined in the Certificate of Designations.
---------------------
Effectiveness Deadline: As defined in Section 3(a) hereof.
----------------------
1
<PAGE>
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Filing Deadline: As defined in Section 3(a) hereof.
---------------
Holders: As defined in Section 2 hereof.
-------
Indemnified Holder: As defined in Section 8(a) hereof.
------------------
Liquidation Preference: As defined in the Certificate of Designations.
----------------------
Preferred Stock: As defined in the preamble hereof.
---------------
Preferred Stock Shares: The Common Stock or other securities which any
----------------------
Holder may acquire upon conversion of the Preferred Stock, together with any
other securities which such Holder may acquire on account of any such
securities, including, without limitation, as the result of any dividend or
other distribution on Common Stock or any split-up of such Common Stock as
provided for in the Certificate of Designations.
Prospectus: The prospectus included in a Registration Statement at the
----------
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(b) hereof.
-------------------
Registrable Securities: The Preferred Stock, Preferred Stock Shares and
----------------------
any other securities issued or issuable with respect to the Preferred Stock or
the Preferred Stock Shares by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization; provided that a security ceases to be a Registrable
Security when it is no longer a Transfer Restricted Security.
Registration Default: As defined in Section 5 hereof.
--------------------
Registration Statement: Any registration statement of the Company relating
----------------------
to the registration for resale of Registrable Securities pursuant to the Shelf
Registration Statement, (i) that is filed pursuant to the provisions of this
Agreement and (ii) including the Prospectus included therein, all amendments and
supplements thereto (including post-effective amendments) and all exhibits and
material incorporated by reference therein.
Rule 144: Rule 144 promulgated under the Act.
--------
Shelf Registration Statement: As defined in Section 3 hereof.
----------------------------
Special Dividends: As defined in Section 5 hereof.
-----------------
Suspension Notice: As defined in Section 6(b) hereof.
-----------------
2
<PAGE>
Transfer Agent: EquiServe.
--------------
Transfer Restricted Securities: The Preferred Stock or Preferred Stock
------------------------------
Shares, until the earliest to occur of (a) the date on which such Preferred
Stock or Preferred Stock Shares, as applicable, is effectively registered under
the Act and disposed of in accordance with a Shelf Registration Statement, (b)
the date on which such Preferred Stock or Preferred Stock Shares, as applicable,
is distributed to the public pursuant to Rule 144 under the Act or (c) the date
on which such Preferred Stock or Preferred Stock Shares, as applicable, is
eligible for resale pursuant to Rule 144 without volume restrictions.
SECTION 2. HOLDERS
(x) Registrable Securities. The securities entitled to the benefits of
----------------------
this Agreement are the Registrable Securities.
(y) Holders of Registrable Securities. A Person is deemed to be a holder
---------------------------------
of Registrable Securities (each, a "Holder") whenever such Person owns
Registrable Securities or has the right to acquire such Registrable Securities,
whether or not such acquisition has actually been effected and disregarding any
legal restrictions upon the exercise of such right.
SECTION 3. SHELF REGISTRATION
The Company shall:
(x) use its reasonable best efforts to cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 90 days after the Closing Date (the "Filing Deadline"), a shelf
---------------
registration statement pursuant to Rule 415 under the Act (the "Shelf
-----
Registration Statement") relating to all Registrable Securities, and
- ----------------------
(y) use its reasonable best efforts to cause such Shelf Registration
Statement to become effective on or prior to 90 days after the Filing Deadline
(such 90th day being referred to herein as the "Effectiveness Deadline").
----------------------
The Company shall use its best efforts to keep any Shelf Registration
Statement required by this Section 3(a) continuously effective, supplemented and
amended as required by, and subject to the provisions of, Sections 6(a) and (b)
hereof to the extent necessary to ensure that it is available for sales of
Registrable Securities by the Holders thereof entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(b)) following the date on which such Shelf Registration
Statement first becomes effective under the Act, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration
Statement have been sold pursuant thereto.
(a) Provision by Holders of Certain Information in Connection with the
------------------------------------------------------------------
Shelf Registration Statement. No Holder of Registrable Securities may include
- ----------------------------
any of its Registrable
3
<PAGE>
Securities in any Shelf Registration Statement pursuant to this Agreement unless
and until such Holder furnishes to the Company in writing, within 20 days after
receipt of a request therefor, the information specified in Item 507 or 508 of
Regulation S-K, as applicable, of the Act for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included therein.
Each selling Holder agrees to promptly furnish additional information required
to be disclosed in order to make the information previously furnished to the
Company by such Holder not materially misleading.
SECTION 4. BLACK OUT PERIOD
During any consecutive 365 day period, the Company may suspend the
effectiveness of the Shelf Registration Statement for an aggregate period of not
more than 90 consecutive days if there is a possible acquisition or business
combination or other transaction, business development or event involving the
Company that may require disclosure in the Shelf Registration Statement and the
Company determines in the exercise of its reasonable judgment that such
disclosure is not in the best interests of the Company and its stockholders or
obtaining any financial statements relating to an acquisition or business
combination required to be included in the Shelf Registration Statement would be
impracticable. In such a case, the Company shall promptly notify Holders of the
suspension of the Shelf Registration Statement's effectiveness, provided that
such notice shall not require the Company to disclose the possible acquisition
or business combination or other transaction, business development or event if
the Company determines in good faith that such acquisition or business
combination or other transaction, business development or event should remain
confidential. Upon the abandonment, consummation, or termination of the
possible acquisition or business combination or other transaction, business
development or event, or the availability of the required financial statements
with respect to a possible acquisition or business combination, the suspension
of the use of the Shelf Registration Statement pursuant to this Section 4 shall
cease and the Company shall promptly comply with Section 6(a)(ii) hereof and
notify the Holders that disposition of Registrable Securities may be resumed.
SECTION 5. SPECIAL DIVIDENDS
If (i) the Registration Statement required by this Agreement is not filed
with the Commission on or prior to the Filing Deadline, (ii) the Registration
Statement has not been declared effective by the Commission on or prior to the
Effectiveness Deadline, or (iii) the Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose (except in the
circumstances specified in Section 4) without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective immediately (each such event referred to
in clauses (i) through (iii), a "Registration Default"), then the Company hereby
--------------------
agrees to pay to each Holder of Registrable Securities affected thereby special
dividends ("Special Dividends") which will accrue and be payable semi-annually
-----------------
on the Preferred Stock (or per such number of Preferred Stock Shares then
issuable upon exercise of or in respect of the Preferred Stock) in addition to
the stated dividends on the Preferred Stock (or per such number of Preferred
Stock Shares then issuable upon exercise of or
4
<PAGE>
in respect of the Preferred Stock), as the case may be, from and including the
date such Registration Default occurs to, but excluding, the date on which (1)
the Shelf Registration Statement is filed, in the case of (i) above, (2) the
Shelf Registration Statement is declared effective, in the case of (ii) above,
or (3) a post- effective amendment to the Registration Statement or an
additional Registration Statement is filed that causes the Shelf Registration
Statement to again be declared effective or made usable, in the case of (iii)
above. During the time that Special Dividends are accruing continuously, the
rate of such Special Dividends shall be 0.50% per annum during the first 90-day
period and shall increase by 0.25% per annum for each subsequent 90-day period,
but in no event shall such rate exceed 1.00% per annum in the aggregate
regardless of the number of Registration Defaults. If, after the cure of all
Registration Defaults then in effect, there is a subsequent Registration
Default, the Special Dividend rate for such subsequent Registration Default
shall initially be 0.25%, regardless of the Special Dividend rate in effect with
respect to any prior Registration Default at the time of the cure of such
Registration Default. All accrued Special Dividends shall be paid to the Holders
entitled thereto, in the manner provided for the payment of dividends as set
forth in the Bye-Laws. All obligations of the Company set forth in this
paragraph that are outstanding with respect to any Registrable Security at the
time such security ceases to be a Registrable Security shall survive until such
time as all such obligations with respect to such Registrable Security shall
have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
In connection with the Shelf Registration Statement, the Company shall
comply with all the provisions of Section 6(a) below and shall use its best
efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 3(b) hereof), and pursuant thereto the Company
will prepare and file with the Commission a Registration Statement relating to
the registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in accordance with
the intended method or methods of distribution thereof within the time periods
and otherwise in accordance with the provisions hereof and pursuant thereto the
Company shall:
(a) General Provisions.
------------------
(i) except in the circumstances specified in Section 4, use its
reasonable best efforts to keep such Registration Statement continuously
effective and provide all requisite financial statements for the period
specified in Section 3 of this Agreement. Except in the circumstances
specified in Section 4, upon the occurrence of any event that would cause
any such Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective and
usable for resale of Registrable Securities during the period required by
this Agreement, the Company shall file promptly an appropriate amendment to
such Registration Statement curing such defect, and, if Commission review
is required, use its reasonable best efforts
5
<PAGE>
to cause such amendment to be declared effective as soon as reasonably
practicable thereafter.
(ii) except in the circumstances specified in Section 4, prepare and
file with the Commission such amendments and post-effective amendments to
the applicable Registration Statement as may be necessary to keep such
Registration Statement effective for the period set forth in Section 3
hereof, or such shorter period as will terminate when all Registrable
Securities covered by such Registration Statement have been sold or until
such Registrable Securities no longer constitute Registrable Securities or
are no longer outstanding; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Act, and to comply fully with Rules 424, 430A and
462, as applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement to
the Prospectus;
(iii) advise the selling Holders promptly and, if requested by such
Persons, confirm such advice in writing, (A) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to any applicable Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of any request
by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act or
of the suspension by any state securities commission of the qualification
of the Registrable Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, or (D)
except in the circumstances specified in Section 4, of the existence of any
fact or the happening of any event that makes any statement of a material
fact made in the Registration Statement, the Prospectus, any amendment or
supplement thereto or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in the
Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time
the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Registrable Securities under state
securities or Blue Sky laws, the Company shall use its best efforts to
obtain the withdrawal or lifting of such order at the earliest practicable
time;
(iv) subject to Section 6(a)(i), if any fact or event contemplated by
Section 6(a)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter
6
<PAGE>
delivered to the purchasers of Registrable Securities, the Prospectus will
not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to the Initial Purchasers and each selling Holder named
in any Registration Statement or Prospectus in connection with such sale,
if any, before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or Prospectus (including all
documents incorporated by reference, if requested by such person), which
documents will be subject to the review and comment of such Holders in
connection with such sale, if any, for a period of at least five Business
Days, and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by
reference, if requested by such person) to which the selling Holders of the
Registrable Securities covered by such Registration Statement in connection
with such sale, if any, shall reasonably object within five Business Days
after the receipt thereof. A selling Holder shall be deemed to have
reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission or fails to comply with
the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus, if
requested by any selling Holders within five Business Days after receipt of
notification thereof from the Company, provide copies of such document to
such selling Holders in connection with such sale, if any, make the
Company's representatives available for discussion of such document and
other customary due diligence matters, and include such information in such
document prior to the filing thereof as such selling Holders may reasonably
request;
(vii) make available at reasonable times for inspection by the
selling Holders participating in any disposition pursuant to such
Registration Statement and any attorney or accountant retained by such
selling Holders, all financial and other records, pertinent corporate
documents of the Company and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
selling Holder, attorney or accountant in connection with such Registration
Statement or any post-effective amendment thereto subsequent to the filing
thereof and prior to its effectiveness;
(viii) if requested by any selling Holders in connection with such
sale, if any, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" of the Registrable Securities; and make all required
filings of such Prospectus supplement or post-effective amendment as soon
as practicable
7
<PAGE>
after the Company is notified of the matters to be included in such
Prospectus supplement or post-effective amendment;
(ix) furnish to each selling Holder in connection with such sale, if
any, without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto, including
all documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each selling Holder, without charge, as many copies of
the Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company
hereby consents to the use (in accordance with law) of the Prospectus and
any amendment or supplement thereto by each of the selling Holders in
connection with the offering and the sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement thereto;
(xi) upon the request of any selling Holder, enter into such
agreements (including underwriting agreements) and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of
the Registrable Securities pursuant to any applicable Registration
Statement contemplated by this Agreement, all to such extent as may be
reasonably acceptable to the Company and as may be reasonably requested by
any Holder of Registrable Securities in connection with any sale or resale
pursuant to any applicable Registration Statement contemplated by this
Agreement and in such connection, the Company shall:
(A) upon request of any selling Holder, furnish (or in the case of
paragraphs (2) and (3), use its best efforts to cause to be furnished) to
each selling Holder, upon the effectiveness of the Shelf Registration
Statement:
(1) a certificate, dated such date, signed on behalf of the
Company by (x) the Chief Executive Officer, President or any Vice
President and (y) a principal financial or accounting officer of the
Company, confirming, as of the date thereof, the matters set forth in
paragraph (e) of Section 6 of the Purchase Agreement and such other
similar matters as the selling Holders may reasonably request;
(2) opinions, dated such date, of counsel for the Company
covering matters similar to those set forth in paragraphs (a), (b) and
(c) of Section 6 of the Purchase Agreement and such other matters as
the selling Holders may reasonably request, and in any event including
a statement to the effect that certain such counsel has participated
in conferences with officers and other representatives of the Company
and representatives of the independent public accountants for the
Company at which the contents of such Registration Statement and the
related Prospectus were discussed, although such counsel has not
independently verified the accuracy, completeness or fairness of such
statements; and that such counsel
8
<PAGE>
advises that, on the basis of the foregoing, no facts came to such
counsel's attention that caused such counsel to believe that the
applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became effective
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus contained in
such Registration Statement as of its date contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included in
any Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated such date, from the
Company's independent accountants, in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with underwritten offerings, and affirming
the matters set forth in the comfort letters delivered pursuant to
Section 6(f) of the Purchase Agreement; and
(B) deliver such other documents and certificates as may be reasonably
requested by the selling Holders to evidence compliance with clause (A)
above and with any customary conditions contained in the any agreement
entered into by the Company pursuant to this clause (xi);
(xii) prior to any public offering of Registrable Securities,
cooperate with the selling Holders and their counsel in connection with the
registration and qualification of the Registrable Securities under the
securities or Blue Sky laws of such jurisdictions as the selling Holders
may reasonably request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to register or
qualify as a foreign corporation where it is not now so qualified or to
take any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so subject;
(viii) in connection with any sale of Registrable Securities that
will result in such securities no longer being Registrable Securities,
cooperate with the selling Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends; and to register such Registrable
Securities in such denominations and such names as the selling Holders may
request at least two Business Days prior to such sale of Registrable
Securities;
9
<PAGE>
(xiv) use its best efforts to cause the disposition of the
Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities, subject to the
proviso contained in clause (xii) above;
(xv) provide a CUSIP number for all Registrable Securities not later
than the effective date of a Registration Statement covering such
Registrable Securities and provide the Transfer Agent or the Trustee, as
the case may be, with printed certificates for the Registrable Securities
which are in a form eligible for deposit with the Depository Trust Company;
(xvi) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
Holders with regard to any applicable Registration Statement, as soon as
practicable, a consolidated earnings statement meeting the requirements of
Rule 158 under the Act (which need not be audited) covering a twelve-month
period beginning after the effective date of the Registration Statement (as
such term is defined in paragraph (c) of Rule 158 under the Act);
(xvii) make appropriate officers of the Company available to the
selling Holders for meetings with prospective purchasers of the Registrable
Securities; and
(xviii) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(b) Restrictions on Holders. Each Holder agrees by acquisition of a
-----------------------
Registrable Security that, upon receipt of the notice referred to in Section 4
or Section 6(a)(i) or any notice from the Company of the existence of any fact
of the kind described in Section 6(a)(iii)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
- ------------------
Transfer Restricted Securities pursuant to the Registration Statement until (i)
such Holder has received copies of the supplemented or amended Prospectus
contemplated by Section 6(a)(iv) hereof, or (ii) such Holder is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus (in each case, the "Recommencement Date"). Each
-------------------
Holder receiving a Suspension Notice hereby agrees that it will either (i)
destroy any Prospectuses, other than permanent file copies, then in such
Holder's possession which have been replaced by the Company with more recently
dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Holder's possession of
the Prospectus covering such Registrable Securities that was current at the time
of receipt of the Suspension Notice. In the event the Company shall deliver a
Suspension Notice other than pursuant to Section 4, the time period regarding
the effectiveness of such Registration Statement set forth in Section 3 hereof,
shall be extended by a number of
10
<PAGE>
days equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the date of delivery of the Recommencement
Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement shall be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses; (ii) all fees and expenses of
compliance with federal securities and state securities or Blue Sky laws; (iii)
all expenses of printing (including printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Company and, in accordance with Section 7(b) below, the Holders of
Registrable Securities; (v) all fees and disbursements of independent certified
public accountants of the Company (including the expenses of any special audit
and comfort letters required by or incident to such performance); and (vi) fees
and expenses of the Transfer Agent, including the fees and expenses of its
counsel.
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with any Registration Statement required by this
Agreement the Company will reimburse the Initial Purchasers and the Holders of
Registrable Securities being registered pursuant to the Shelf Registration
Statement for the reasonable fees and disbursements of not more than one
counsel, who shall be Latham & Watkins, unless another firm shall be chosen by
the Holders of a majority in principal amount of the Registrable Securities for
whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless (i) each Holder,
(ii) the directors, officers, employees and agents of each Holder and (iii) each
person who controls any Holder within the meaning of either the Act or the
Exchange Act (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Holder") against any and all
------------------
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, preliminary prospectus or
Prospectus or any information provided by the Company to any Holder or
prospective purchaser of Preferred Stock or Preferred Stock Shares, as the case
may be, or in any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and agree to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably
11
<PAGE>
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
-------- -------
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission (i) made in any Registration
Statement, preliminary prospectus or Prospectus, or in any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by any Holder specifically for inclusion therein or
(ii) made in any preliminary prospectus, if such untrue statement or omission or
alleged omission made in such preliminary prospectus is eliminated or remedied
in the Prospectus relating to it (as amended or supplemented, as applicable) and
a copy of such Prospectus shall not have been furnished to the person alleging
such loss, claim, damage or liability as required under applicable law. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Holder of Registrable Securities severally agrees to
indemnify and hold harmless the Company, its directors, officers, employees and
agents and each person who controls the Company within the meaning of either the
Act or the Exchange Act, to the same extent as the foregoing indemnity from the
Company to each of the Indemnified Holders, but only with reference to written
information relating to such Indemnified Holder furnished to the Company by such
Indemnified Holder specifically for inclusion in any Registration Statement,
preliminary prospectus or Prospectus (or in any amendment or supplement
thereto). This indemnity agreement will be in addition to any liability which
any Indemnified Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which
12
<PAGE>
are different from or additional to those available to the indemnifying party,
(iii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. It is understood that the indemnifying party shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all indemnified parties, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Indemnified Holder and such control persons shall be
designated in writing by a majority of the Indemnified Holders and any such
separate firm of the Company, its directors, its officers and such control
persons of the Company shall be designated in writing by the Company. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to hold harmless an indemnified party for any
reason, the Company and the Holders agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively
"Losses") to which the Company and one or more of the Holders may be subject in
- -------
such proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and by the Indemnified Holders, on the other hand,
from the sale of Registrable Securities; provided, however, that in no case
shall any Holder (except as may be provided in any agreement among the Holders
relating to the sale of its Registrable Securities) be responsible for any
amount in excess of the amount by which the total received by such Holder with
respect to its sale of Registrable Securities pursuant to a Registration
Statement exceeds the sum of (A) the amount paid to such Holder for such
Registrable Securities plus (B) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Indemnified Holder shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company, on the one hand, and of the Indemnified Holder, on the other hand, in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by either the Company or the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and each Holder
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person
13
<PAGE>
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8, each person
who controls a Holder within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of a Holder shall have the same
rights to contribution as such Holder, and each person who controls the Company
within the meaning of either the Act or the Exchange Act and each officer and
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d). The remedies provided in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any failure by the
--------
Company to comply with its obligations under Section 3 hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
any Initial Purchaser or any Holder may obtain such relief as may be required to
specifically enforce the Company's obligations under Section 3 hereof. The
Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company shall not, on or after the
--------------------------
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10 (c)(i), the Company has obtained the written consent
of the Holders of all outstanding Registrable Securities and (ii) in the case of
all other provisions hereof, the Company has
14
<PAGE>
obtained the written consent of the Holders of a majority of the outstanding
principal amount of Registrable Securities (excluding Registrable Securities
held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver
or consent to departure from the provisions hereof that relates exclusively to
the rights of Holders whose securities are being registered pursuant to the
Shelf Registration Statement and that does not affect, directly or indirectly,
the rights of other Holders whose securities are not being registered pursuant
to the Shelf Registration Statement may be given by the Holders of a majority of
the outstanding principal amount of Registrable Securities subject to such Shelf
Registration Statement.
(d) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telecopier or air courier
guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Transfer Agent; and
(ii) if to the Company:
Global Crossing Ltd.
Wessex House
45 Reid Street
Hamilton HM12 Bermuda
Telecopier No.: (441) 296-8606
Attention: Secretary of the Company
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier No.: (212) 455-2502
Attention: D. Rhett Brandon, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties hereto,
including, without limitation, and without the need for an express assignment,
subsequent Holders of Registrable
15
<PAGE>
Securities; provided, that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Registrable Securities in violation
of the terms hereof or of the Purchase Agreement, Bye-laws or the Certificate of
Designations. If any transferee of any Holder shall acquire Registrable
Securities in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
(l) Consent to Jurisdiction and Service. To the fullest extent permitted
------------------------------------
by applicable law, the Company hereby irrevocably submits to the jurisdiction of
any Federal or State court located in the Borough of Manhattan in The City of
New York, New York in any suit, action or proceeding based on or arising out of
or relating to this Agreement or any Registrable Securities, and irrevocably
agrees that all claims in respect of such suit or proceeding may be determined
in any such court. The Company irrevocably waives, to the fullest extent
permitted by law, any objection which it may have to the laying of the venue of
any such suit, action or proceeding brought in such a court and any claim that
any suit, action or proceeding brought in such a court has been brought in an
inconvenient forum. The Company agrees that final judgment in any such suit,
action or proceeding brought in such a court shall be conclusive and binding
upon the Company and may be enforced in the courts of Bermuda (or any other
courts to the jurisdiction
16
<PAGE>
of which the Company is subject) by a suit upon such judgment, provided that
--------
service of process is effected upon the Company in the manner specified herein
or as otherwise permitted by law. The Company hereby irrevocably designates and
appoints CT Corporation System, 1633 Broadway - 23rd Floor, New York, New York
(the "Process Agent"), as the authorized agent of the Company upon whom process
-------------
may be served in any such suit or proceeding, it being understood that the
designation and appointment of the Process Agent as such authorized agent shall
become effective immediately without any further action on the part of the
Company. The Company hereby represents to each Initial Purchaser that it has
notified the Process Agent of such designation and appointment and that the
Process Agent has accepted the same in writing. The Company hereby irrevocably
authorizes and directs the Process Agent to accept such service. The Company
further agrees that service of process upon the Process Agent and written notice
of said service to the Company mailed by prepaid registered first class mail or
delivered to the Process Agent at its principal office, shall be deemed in every
respect effective service of process upon the Company in any such suit or
proceeding. Nothing herein shall affect the right of any Initial Purchaser or
any person controlling any Initial Purchaser to serve process in any other
matter permitted by law. The Company further agrees to take any and all action,
including the execution and filing of any and all such documents and instruments
as may be necessary to continue such designation and appointment of the Process
Agent in full force and effect so long as the Company has any outstanding
obligations under this Agreement, the Registrable Securities, Bye-laws or the
Certificate of Designations. To the extent that the Company has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of note, attachment prior to judgment, attachment in
aid of execution, executor or otherwise) with respect to itself or its property,
the Company hereby irrevocably waives such immunity in respect of its
obligations under this Agreement, to the extent permitted by law.
[Registration Rights Agreement Signature Pages Follow]
17
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Global Crossing Ltd.
By:
Name:
Title:
<PAGE>
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
Chase Securities Inc.
Morgan Stanley Dean Witter & Co.
CIBC World Markets Corp.
Donaldson, Lufkin & Jenrette Securities Corporation
Credit Suisse First Boston Corporation
By: Merrill Lynch, Pierce, Fenner & Smith Incorporated
By:_______________________________________
Name:
Title:
By: Salomon Smith Barney Inc.
By:_______________________________________
Name:
Title:
For themselves and the other Initial Purchasers
<PAGE>
EXHIBIT 12.1
GLOBAL CROSSING LTD. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Historical Proforma
---------------------------------------------------- --------------------------------
For the Period
March 19, 1997
Nine Months Year Ended (Date of Inception) Nine Months Year Ended
Ended September 30, December 31, to December 31, Ended September 30, December 31,
1999 1998 1997 1999 1998
------------------- ------------ ------------------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
FIXED CHARGES:
Interest on debt and
capitalized leases and
amortization of
deferred finance
fees................... $ 81,538 $ 42,880 $ -- $ 375,401 $ 450,092
Interest element of
rentals................ 951 202 2 47,447 61,694
Interest capitalized... 35,313 49,933 -- 64,460 68,085
-------- -------- -------- --------- ---------
TOTAL................ $117,802 $ 93,015 $ 2 $ 487,308 $ 579,871
======== ======== ======== ========= =========
PREFERRED DIVIDENDS:
Amount................. $ 41,313 $ 12,681 $ 12,690 $ 142,140 $ 147,116
======== ======== ======== ========= =========
Gross up to pretax
based on 42.22%
effective tax rate
(except for 1997
information)........... $ 71,501 $ 21,947 $ 12,690 $ 246,002 $ 254,614
======== ======== ======== ========= =========
EARNINGS:
Income before
cumulative effect of
change in accounting
principle and
extraordinary item..... $158,636 $(68,194) $ (160) $(348,664) $(631,004)
Add back:
Provision for income
taxes................ 110,055 33,067 -- 152,827 139,522
Equity in loss of
affiliates........... 5,471 2,508 -- 12,939 21,206
Capitalized interest
included in cost of
capacity sold........ 11,345 9,128 -- 11,345 9,128
Fixed charges less
interest
capitalized.......... 82,489 43,082 2 422,848 511,786
-------- -------- -------- --------- ---------
$367,996 $ 19,591 $ (158) $ 251,295 $ 991,841
======== ======== ======== ========= =========
RATIO OF EARNINGS TO
FIXED CHARGES........... 3.12x -- -- -- --
EXCESS OF FIXED CHARGES
OVER EARNINGS........... $(73,424) $ (160) $(236,063) $(529,233)
RATIO OF EARNINGS TO
FIXED CHARGES AND
PREFERRED DIVIDENDS..... 1.94x -- -- -- --
EXCESS FIXED CHARGES AND
PREFERRED DIVIDENDS OVER
EARNINGS................ $(95,371) $(12,850) $(482,065) $(783,847)
</TABLE>
<PAGE>
Exhibit 21.1
GLOBAL CROSSING SUBSIDIARIES
Asia Global Crossing Holdings Ltd. (GC owns 93%)
Asia Global Crossing Hong Kong Limited
Asia Global Crossing Ltd.
Atlantic Crossing Holdings Ltd.
Atlantic Crossing Holdings U.K. Ltd.
Atlantic Crossing Ltd.
BRT Limited
Eulink Limited
Euratel Limited
Eutel Limited
Frontier Corporation
GC Dev. Co., Inc.
GC Pacific Landing Corp.
GC Pan European Crossing Belgie B.V.B.A.
GC Pan European Crossing Danmark A.p.S.
GC Pan European Crossing Deutschland GmbH
GC Pan European Crossing Espana S.L.
GC Pan European Crossing France S.A.R.L.
GC Pan European Crossing Holdings B.V.
GC Pan European Crossing Italia s.r.l.
GC Pan European Crossing Luxembourg I, S.R.L.
GC Pan European Crossing Luxembourg II, S.R.L.
GC Pan European Crossing Nederland B.V.
GC Pan European Crossing Osterreich GmbH
GC Pan European Crossing Switzerland GmbH
GC Pan European Crossing UK Ltd.
GC SAC Argentina S.R.L.
GC St. Croix Co.
GC UK Holding Ltd.
GCT Pacific Holdings, Ltd.
Global Access Ltd. (GC owns 49%)
Global Crossing (Bidco) Limited
Global Crossing (Holdco) Limited
Global Crossing Development Co.
Global Crossing Employee Services Inc.
Global Crossing Europe Ltd.
Global Crossing Holdings II Ltd.
Global Crossing Holdings Ltd.
Global Crossing Holdings U.K. Ltd.
Global Crossing Intermediate UK Holdings Limited
Global Crossing International, Ltd.
Global Crossing Ireland, Limited
Global Crossing Japan KK
Global Crossing Landing Holdings Ltd.
Global Crossing Landing Mexicana S. De R.L.
Global Crossing Ltd.
Global Crossing Marketing U.K. Ltd.
Global Crossing Mexicana S. De R.L. de C.V.
Global Crossing Network Center Ltd.
Global Crossing Network Center UK Ltd.
Global Crossing Services Europe, Ltd.
Global Crossing Services Ireland, Ltd.
Global Crossing Servicios S. De R.L. de C.V.
Global Crossing USA Inc.
Global Crossing USA Inc.
<PAGE>
Global Marine Systems Ltd.
Global Telesystems GmbH
GT Landing Corp.
GT Netherlands B.V.
GT U.K. Ltd.
MAC Landing Corp.
Mid-Atlantic Crossing Holding UK Ltd.
Mid-Atlantic Crossing Holdings Ltd.
Mid-Atlantic Crossing Ltd.
PAC Landing Corp.
PAC Panama Ltd.
Pacific Crossing Holdings Ltd.
Pacific Crossing Ltd. (GCT Pacific Holdings, Ltd. owns 57%)
Pacific Crossing UK Limited
Pan American Crossing Holdings Ltd.
Pan American Crossing Landing B.V.
Pan American Crossing Ltd.
Pan American Crossing UK Ltd.
PC Landing Corp.
PCL Japan Ltd.
Racal Internet Services Limited
Racal Telecommunications Inc.
Racal Telecommunications Limited
Racal Telecommunications Networks Limited
SAC Brasil Backhaul Holdings Ltda.
SAC Brasil Backhaul Ltda.
SAC Brasil Holding Ltda
SAC Brasil Ltda.
SAC Brazil (Backahaul)Ltd.
SAC Brazil Landing Holding Ltda.
SAC Brazil Landing Ltda.
SAC Chile S.A.
SAC Columbia Backhaul Limitada
SAC Columbia Limitada
SAC Landing Corp.
SAC Panama Landing Ltd.
SAC Panama S.A.
SAC Peru Backhaul S.R.L.
SAC Peru S.R.L.
South American Crossing (Backahul) Ltd.
South American Crossing (Subsea) Ltd.
South American Crossing Holding Ltd.
South American Crossing Holdings (Backhaul) Ltd.
South American Crossing Holdings (Subsea) Ltd.
South American Crossing Ltd.
US Crossing, Inc.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or incorporated by
reference to this Registration Statement on Form S-3.
/s/ Arthur Andersen & Co.
January 14, 2000
Hamilton, Bermuda
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of Global Crossing Ltd. of our report dated January 25,
1999 relating to the financial statements, which appears in Frontier
Corporation's 1998 Annual Report to Shareholders, which is incorporated by
reference in its Annual Report on Form 10-K for the year ended December 31,
1998, and which appears on Page 20 of the Frontier Corporation Current Report on
Form 8-K dated January 26, 1999. We also consent to the incorporation by
reference of our report dated January 25, 1999 relating to the financial
statement schedule, which appears in such Annual Report on Form 10-K. We also
consent to the reference to us under the headings "Experts" and "Frontier
Selected Historical Financial Information" in this Registration Statement.
/s/ PricewaterhouseCoopers LLP
- ----------------------------------
PricewaterhouseCoopers LLP
Rochester, New York
January 14, 2000
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion of our report dated 26 May 1999 with respect to
the balance sheets of Cable & Wireless Global Marine as of 31 March 1999 and
1998 and the results of their operations and cashflows for each of the years in
the three-year period ended 31 March 1999, incorporated by reference into this
Registration Statement on Form S-3, of Global Crossing Ltd. and to the
references to our firm under the headings "Experts" and "Global Marine systems
selected historical financial information" in this Registration Statement.
Yours faithfully
/s/ KPMG Audit Plc
-------------------------------
KPMG Audit Plc
Ipswich, England
January 14, 2000
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion of our report dated 8 October 1999 with respect to
the combined balance sheets of Racal Telecommunications Limited, Racal
Telecommunications Networks Limited, Racal Internet Services Limited and Racal
Telecommunications Inc. (collectively "Racal Telecom") as of 31 March 1999 and
1998 and the combined results of their operations and cashflows for each of the
years in the three-year period ended 31 March 1999, incorporated by reference
into this Registration Statement on Form S-3 of Global Crossing Ltd. and to the
references to our firm under the headings "Experts" and "Racal Telecom selected
historical financial information" in this Registration Statement.
Yours faithfully
/s/ Deloitte & Touche
-------------------------------
Deloitte & Touche
London, England
January 14, 2000
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of Global Crossing Ltd. of our report dated December 15,
1999 relating to the financial statements of HCL Holdings Limited for each of
the three years ended December 31, 1998. We also consent to the reference to us
under the headings "Experts" and "HCL Holdings Selected Historical Financial
Information" in this Registration Statement.
/s/ PricewaterhouseCoopers
- ----------------------------------
PricewaterhouseCoopers
Hong Kong
January 14, 2000
