<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) May 16, 1999
____________
GLOBAL CROSSING HOLDINGS LTD.
________________________________________________________
(Exact Name of Registrant as Specified in Charter)
Bermuda 333-61457 98-0186828
____________________________ ___________ ___________________
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
Wessex House, 45 Reid Street, Hamilton HM12 Bermuda
________________________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (441) 296-8600
______________
NOT APPLICABLE
________________________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
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================================================================================
Item 5. Other Events.
On May 16, 1999, Global Crossing Ltd., a Bermuda company ("Global
Crossing"), Frontier Corporation, a New York corporation ("Frontier"), and GCF
Acquisition Corp., a New York corporation and a wholly owned subsidiary of
Global Crossing (the "Merger Sub"), entered into a Consent and Amendment No. 1
to the Agreement and Plan of Merger, dated as of March 16, 1999, among Global
Crossing, Frontier and the Merger Sub (the "Consent and Amendment"). A copy of
the Consent and Amendment is attached hereto as Exhibit 2 and is incorporated
herein by reference.
On May 17, 1999, Global Crossing and U S WEST, Inc., a Delaware
corporation ("U S WEST"), announced a definitive agreement to merge. A copy of
the Global Crossing and U S WEST press release, dated May 17, 1999, and the
Global Crossing and U S WEST joint analyst presentation, dated May 17, 1999
(the "Analyst Presentation"), are attached hereto as Exhibits 99.1 and 99.2,
respectively, and are incorporated herein by reference.
Statements made in the Analyst Presentation that state the intentions,
beliefs, expectations or predictions of Global Crossing, U S WEST or their
respective managements for the future are forward-looking statements. It is
important to note that both Global Crossing's and U S WEST's actual results
could differ materially from those projected in such forward-looking statements.
Information concerning factors that could cause actual results to differ
materially from those in the forward-looking statements is contained from time
to time in the filings of each of Global Crossing and U S WEST with the U.S.
Securities and Exchange Commission (the "SEC"). Copies of these filings may be
obtained by contacting Global Crossing or U S WEST, as applicable, or the SEC.
Item 7. Exhibits.
The following exhibits are filed as part of this Current Report on
Form 8-K:
Exhibit Number Exhibit
- ---------------- -------
2 Consent and Amendment No.1., dated as of May 16, 1999,
among Global Crossing Ltd., Frontier Corporation and GCF
Acquisition Corp.
99.1 Joint Press Release of Global Crossing Ltd., and U S
WEST, Inc., dated May 17, 1999
99.2 Joint Analyst Presentation of Global Crossing Ltd. and
U S WEST, Inc., dated May 17, 1999
2
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GLOBAL CROSSING HOLDINGS LTD.
(Registrant)
/s/ Douglas Molyneux
____________________________
Douglas Molyneux
Secretary
Date: May 18, 1999
3
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4
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2 Consent and Amendment No.1, dated as of May 16, 1999,
among Global Crossing Ltd., Frontier Corporation and GCF
Acquisition Corp.
99.1 Joint Press Release of Global Crossing Ltd. and U S
WEST, Inc., dated May 17, 1999
99.2 Joint Analyst Presentation of Global Crossing Ltd. and
U S WEST, Inc., dated May 17, 1999
<PAGE>
EXHIBIT 2
CONSENT AND AMENDMENT NO. 1
CONSENT AND AMENDMENT NO.1, dated as of May 16, 1999 (this "Consent
-------
and Amendment"), among GLOBAL CROSSING LTD., a Bermuda company ("Global"), GCF
- ------------- ------
ACQUISITION CORP., a New York corporation and a wholly owned subsidiary of
Global ("Merger Sub"), and FRONTIER CORPORATION, a New York corporation
----------
("Frontier"), to the Agreement and Plan of Merger, dated as of March 16, 1999
--------
(the "Original Agreement"), among Global, Merger Sub and Frontier. Capitalized
------------------
terms used but not defined herein shall have the meanings ascribed to such terms
in the Original Agreement.
WHEREAS, simultaneously with the execution hereof, Global is entering
into an Agreement and Plan of Merger (the "Second Agreement"), dated as of the
----------------
date hereof, between Global and US West, Inc. ("US West"), pursuant to which
-------
Global and US West intend to enter into a business combination the primary
economic terms of which are summarized on a term sheet attached hereto as
Schedule 1, a Tender Offer and Purchase Agreement, dated as of the date hereof
(the "Tender Agreement"), between Global and US West, pursuant to which US West
----------------
will commence a tender offer for 9.5% of the shares of Global Common Stock at a
price of $62.75 per share and certain related agreements;
WHEREAS, Global has requested that Frontier consent to Global's
entering into the Second Agreement and the Tender Agreement, and Frontier has
agreed to consent thereto upon the terms and subject to the conditions specified
in this Consent and Amendment;
WHEREAS, in consideration for such consent, Frontier has requested and
Global has agreed to amend the Original Agreement on the terms provided herein;
and
WHEREAS, the shareholders of Global who are party to the Voting
Agreement have reaffirmed the Voting Agreement in light of this Consent and
Amendment, which reaffirmation is attached hereto as Exhibit C.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Consent. Frontier hereby consents, pursuant to Sections 4.2(e),
-------
4.2(g) and 4.2(k) and the first sentence of each of Sections 5.1(a) and 5.4 of
the Original Agreement, to the Second Agreement, on the terms contemplated by
the first recital hereof and reflected in the Second Agreement as it exists on
the date hereof in all material respects in the form attached hereto as Exhibit
A, and to the Tender Agreement, on the terms contemplated by and reflected in
the Tender Agreement as it exists on the date hereof in all material respects in
the form attached hereto as Exhibit B; provided that it is expressly understood
and agreed that Global is representing and covenanting hereby that (i) the
entering into of the Second Agreement and the Tender Agreement and the
consummation of the transactions contemplated thereby (in each case, as the
Second Agreement and the Tender Agreement exist on the date hereof or as such
agreements may be amended, modified or waived after the date hereof) do not and
will not
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2
constitute a breach by Global of any provision of the Original Agreement,
including Section 4.2(h) (other than possibly Sections 4.2(e), 4.2(g) and 4.2(k)
and the first sentence of each of Sections 5.1(a) and 5.4), either before or
after this Consent and Amendment and regardless of the consent of Frontier
contained herein, (ii) Frontier's consent does not constitute a consent to or
waiver of any breach of any provision of the Original Agreement, including
Section 4.2(h), other than as set forth above with respect to Sections 4.2(e),
4.2(g) and 4.2(k) and the first sentence of each of Sections 5.1(a) and 5.4, it
being understood that Frontier's consent does not constitute a waiver or
amendment of the ongoing applicability of any such Sections, and (iii) the
record date for the shareholder vote required to be obtained by Global under the
terms of the Second Agreement, the record date for any election to be made by
shareholders under the Second Agreement and the shareholder meeting to be held
in connection therewith, shall each occur after the Effective Time.
2. Amendment to Section 1.8(a) of the Original Agreement. Section
-----------------------------------------------------
1.8(a) of the Original Agreement is hereby amended by deleting such Section in
its entirety and inserting in lieu thereof the following:
(a) At the Effective Time by virtue of the Merger and without any
action on the part of the holder thereof, each share of Frontier Common
Stock issued and outstanding immediately prior to the Effective Time (other
than shares of Frontier Common Stock owned or held directly or indirectly
by Global or directly by Frontier, all of which shall be canceled as
provided in Section 1.8(c)) shall, except as provided in Section 7.1(g), be
converted into the right to receive that number of shares of Global Common
Stock equal to the Exchange Ratio (as defined below) (the "MERGER
CONSIDERATION"). "EXCHANGE RATIO" means the quotient (rounded to the
nearest 1/10,000) determined by dividing $63.00 (or $62.00 in the event
that no shares of Global Common Stock are purchased pursuant to the tender
offer made under the terms of the Tender Agreement or any substitute or
similar offer) (in either case, as increased by 7% per annum, compounded
daily, from and after December 31, 1999 to and including the Effective
Time) (such amount, including such increase, if any, the "SPECIFIED VALUE")
by the Average Price as defined below. "AVERAGE PRICE" means the average
(rounded to the nearest 1/10,000) of the volume weighted averages (rounded
to the nearest 1/10,000) of the trading prices of Global Common Stock on
the Nasdaq National Market ("NASDAQ"), as reported by Bloomberg Financial
Markets (or such other source as the parties shall agree in writing), for
the 15 trading days randomly selected by lot by Frontier and Global
together from the 30 consecutive trading days ending on the trading day
immediately preceding the date on which all the conditions to Closing
(other than conditions that, by their terms, cannot be satisfied until the
Closing Date so long as it is reasonably apparent that such conditions will
be able to be satisfied on the Closing Date) set forth in Article VI shall
have been satisfied or waived (the "DETERMINATION DATE"); PROVIDED, that
the Exchange Ratio shall not be less than 1.1095 (or 1.0919 in the event
that no shares of Global Common Stock are purchased pursuant to the tender
offer made under the terms of the Tender Agreement or any substitute or
similar offer), or, unless Global shall have exercised its rights to make
a Global Adjustment Election or a Combination Election under Section
7.1(g), greater than 1.8229 (or 1.7939 in the event that no shares of
Global Common stock are purchased pursuant to the tender offer made
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3
under the terms of the Tender Agreement or any substitute or similar offer)
(in the case of the 1.8229 or the 1.7939, as increased by 7% per annum,
compounded daily, from and after December 31, 1999 to and including the
Effective Time). If prior to the Effective Time, Global should split or
combine the shares of Global Common Stock, or pay a stock dividend or other
stock distribution in shares of Global Common Stock, or otherwise change
the shares of Global Common Stock into any other securities, or make any
other dividend or distribution on the shares of Global Common Stock, then
the Exchange Ratio will be appropriately adjusted to reflect such split,
combination, dividend or other distribution or change.
3. Amendment to Section 1.10(b) of the Original Agreement. Section
-------------------------------------------------------
1.10(b) of the Original Agreement is hereby amended by adding the following
sentence at the end thereof:
Alternatively, Global stockholders shall exchange all of their shares of
Global capital stock for New Global capital stock pursuant to a Scheme of
Arrangement in accordance with Bermuda law.
4. Amendment to Section 4.2 of the Original Agreement. Section 4.2
--------------------------------------------------
of the Original Agreement is hereby amended by inserting the words ", except as
otherwise provided herein" after the words "the Effective Time" and before the
words ", Global agrees" in the second line of the first paragraph thereof.
5. Amendment to Section 4.2(d) of the Original Agreement. Section
-----------------------------------------------------
4.2(d) of the Original Agreement is hereby amended by inserting the following
words at the end thereof:
; provided that, subject to the prior written consent of Frontier (which
consent shall not be unreasonably withheld or delayed), Global shall be
permitted to change its jurisdiction of incorporation by (i) achieving a
"discontinuance" under the laws of Bermuda and (ii) continuing in, and
being subject to the laws of, any other jurisdiction
6. Amendment to Section 4.2(h) of the Original Agreement. Section
-----------------------------------------------------
4.2(h) of the Original Agreement is hereby amended by deleting such Section in
its entirety and inserting in lieu thereof the following:
(h) TAX-FREE QUALIFICATION. Each of Global and Merger Sub shall not,
and shall not permit any of their Subsidiaries to, take any action, whether
before or after the Effective Time, that could prevent or impede the Merger
from qualifying as a reorganization under Section 368 of the Code,
including any action taken in connection with structuring or consummating
the transactions contemplated by the Second Agreement, the Tender Agreement
and any other agreements related thereto either before or after the date
hereof. Any payment of cash or other property to, or on behalf of, a
shareholder of Global in the merger contemplated by the Second Agreement
(including any payment in respect of dissenter's or appraisal rights but
excluding any cash paid in lieu of fractional shares) shall be paid by
Frontier.
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4
7. Amendment to Section 5.2 of the Original Agreement. Section 5.2
--------------------------------------------------
of the Original Agreement is hereby amended by inserting the following sentence
at the end thereof:
Global will cause at least two of the individuals designated by Frontier
pursuant to this Section 5.2 to be included as Global's representatives on
the board of directors of Parent (as defined in the Second Agreement)
pursuant to the Second Agreement.
8. Amendment to Add a New Section 5.14 to the Original Agreement.
-------------------------------------------------------------
The Original Agreement shall be amended by inserting the following new Section
5.14 immediately following Section 5.13 thereof:
5.14 SECOND VOTING AGREEMENT. Global represents that US West has
entered into a voting agreement, dated as of May 16, 1999 (the "SECOND
VOTING AGREEMENT"), with Global pursuant to which US West has agreed to
vote any shares of Global owned by it in favor of the transactions
contemplated by the Original Agreement and this Consent and Amendment and,
other than in specified circumstances, not to sell shares of Global Common
Stock owned by it prior to the consummation of the transactions
contemplated in the Second Agreement. Global agrees to enforce such
provisions of the Second Voting Agreement and that it will not waive any
such provisions without the consent of Frontier.
9. Amendment to Section 7.1(b) of the Original Agreement. Section
-----------------------------------------------------
7.1(b) of the Original Agreement is hereby amended by inserting the following
words at the end thereof "; PROVIDED, FURTHER, that if on the Termination Date
all of the conditions contained in Article VI have been satisfied or waived,
other than (i) conditions that, by their terms, cannot be satisfied until the
Closing Date so long as it is reasonably apparent that such conditions will be
able to be satisfied on the Closing Date and (ii) the condition specified in
Section 6.1(c), then Global shall not have the right to terminate this Agreement
under this Section 7.1(b)."
10. Amendment to Section 7.1(g) of the Original Agreement. Section
-----------------------------------------------------
7.1(g) of the Original Agreement is hereby amended by:
a. deleting all references therein to "$62.00" and inserting in lieu
thereof the words "the Specified Value", and
b. adding the following sentence immediately preceding the last
sentence:
Notwithstanding anything herein to the contrary if the Second
Agreement has not been terminated, Global shall not make the Cash Top-
Up Election or the Combination Election without the consent of
Frontier, which consent shall not be unreasonably withheld; PROVIDED
that Frontier may withhold its consent in its sole discretion if the
making of either such election would result in the conditions set
forth in Section 6.2(c) or 6.3(c) of the Original Agreement from
failing to be satisfied (including by reason of the consummation of
the transactions contemplated by the Second Agreement and the Tender
Agreement).
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5
11. Amendment to Section 8.5(b) of the Original Agreement. Section
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8.5(b) of the Original Agreement is hereby amended by deleting such section in
its entirety and inserting in lieu thereof the following:
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement other than Section 5.8 (which is intended to be for the benefit
of the Persons covered thereby ("SECTION 5.8 PERSONS") and may be enforced
directly or indirectly by, or by a representative of, such Persons against
Global and its successors, assigns and parents) and other than Sections
4.2(h) and 5.2 (which are intended to be for the benefit of Persons who,
immediately prior to the Effective Time, were Frontier shareholders
("FORMER FRONTIER SHAREHOLDERS") and may be enforced directly or indirectly
by, or by a representative of, a Former Frontier Shareholder following the
Effective Time against Global and its successors, assigns and parents). It
is the intent of this Agreement (a) to create a right to direct, indirect
and representative action by Former Frontier Shareholders against Global
and its successors, assigns and parents with respect to Sections 4.2(h) and
5.2 and Section 5.8 Persons with respect to Section 5.8 and (b) that the
Former Frontier Shareholders are third party beneficiaries with respect to
Section 4.2(h) and 5.2 and Section 5.8 Persons are third party
beneficiaries with respect to Section 5.8. Global agrees that its
agreements contained in Section 8.9 of the Agreement shall also cover any
legal action or proceeding by a Former Frontier Shareholder or a Section
5.8 Person under this Section 8.5(b).
12. Authorization, Execution and Delivery; No Conflicts. (a) This
---------------------------------------------------
Consent and Amendment has been duly authorized, executed and delivered by each
party hereto and constitutes a valid and binding agreement of each such party,
enforceable against such party in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally, by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by an implied covenant of
good faith and fair dealing.
(b) The execution and delivery of this Consent and Amendment does not
or will not, as the case may be, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in a Violation pursuant
to: (A) any provision of the constituent documents of each party hereto, or (B)
except as would not have a Material Adverse Effect on such party and, subject to
obtaining or making the consents, approvals orders, authorizations,
registrations, declarations and filings referred to in paragraph (c) below, any
loan or credit agreement, note, mortgage, bond, indenture, lease, benefit plan
or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to such party or any Subsidiary of such party or their respective
properties or assets.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to any party hereto or any Subsidiary of such party in connection with
the execution and delivery of this Consent and Amendment by such party or the
consummation of the transactions contemplated hereby, except
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6
for the Required Consents and such consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to make or obtain
would not have a Material Adverse Effect on such party.
13. Effective Date; No Other Consents or Amendments. Each of the
-----------------------------------------------
parties hereto agrees that the consent under and amendments to the Original
Agreement contained herein shall be effective upon execution of this Consent and
Amendment by each party hereto. Except as expressly amended hereby, the
provisions of the Original Agreement are and shall remain in full force and
effect. This Consent and Amendment shall not be deemed to constitute a waiver
of, or consent to, or a modification or amendment of, any other provision of the
Original Agreement except as expressly provided herein or to prejudice any other
right or rights which any party may now have or may have in the future under or
in connection with the Original Agreement. This Consent and Amendment shall not
constitute an agreement or obligation of any party to consent to, waive, modify
or amend any other term, condition, subsection or section of the Original
Agreement.
14. Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of New York.
15. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, Global, Merger Sub and Frontier have caused this
Consent and Amendment to be executed as of the date first written above by their
respective officers thereunto duly authorized.
GLOBAL CROSSING LTD.
By: /s/ Thomas J. Casey
-------------------------------
Name: Thomas J. Casey
Title: Vice Chairman
GCF ACQUISITION CORP.
By: /s/ Thomas J. Casey
-------------------------------
Name: Thomas J. Casey
Title: Vice Chairman
FRONTIER CORPORATION
By: /s/ Joseph P. Clayton
-------------------------------
Name: Joseph P. Clayton
Title: Chief Executive Officer
<PAGE>
EXHIBIT 99.1
GLOBAL CROSSING AND U S WEST TO MERGE
Leaders In DSL, Next-Generation Network Create First Global & Local Service
Provider
- - Will deliver seamless end-to-end connectivity for local, national and
international customers - Two separate tracking stocks will provide choice for
income and growth investors - $75 billion company with 115,000 route miles will
connect 185 cities worldwide
HAMILTON, BERMUDA and DENVER, CO, May 17, 1999 - Global Crossing Ltd. (NASDAQ:
GBLX) and U S WEST, Inc. (NYSE: USW) today announced a definitive agreement for
an industry-transforming merger that will create a seamless end-to-end local-to-
global broadband network, provide integrated telecommunications and data
services, and accelerate the deployment of high speed Internet services to
local, national and global markets.
The new company, which will be called Global Crossing Corporation, will be the
first Global and Local Service Provider in an era when traditional RBOCs and
long distance carriers are becoming obsolete. Including Frontier Corporation
(NYSE: FRO), a leading provider of integrated telecommunications and Internet
services which is being acquired by Global Crossing, the combination has a
current pro forma market capitalization of more than $75 billion. The new
company will be 50% owned by Global Crossing/Frontier shareholders and 50% owned
by U S WEST shareholders.
The three companies had combined 1998 sales in excess of $15 billion; earnings
before interest, taxes, depreciation and amortization (EBITDA) of over $6.2
billion, and over 63,000 employees. They will have over 115,000 combined route
miles, more than 2.8 million fiber miles and a network linking 19 countries and
185 cities.
Solomon D. Trujillo, Chairman, President and CEO of U S WEST, said, "This merger
brings together the first mile, the last mile and everything in between. It
opens up a new world of advanced communications services to local customers
across the globe. It combines all the elements necessary for building the data-
centric telecommunications network of the future for both residential and
commercial customers."
Robert Annunziata, Chief Executive Officer of Global Crossing, said, "This
transaction will give local users in the U.S. and around the world seamless
access to a full array of advanced data, voice and Internet capabilities and
services across a cutting-edge global network. The combination will create an
aggressive, high-bandwidth communications carrier which will target telecom
markets worldwide. U S WEST's advanced technology and more than 25 million
customers in the fastest growing region of the U.S. make it an ideal partner as
we continue to expand our global infrastructure."
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The new company will establish two separate tracking stocks to give investors a
choice of high-growth and income-oriented investment options. Global Crossing
"Class G" (Global Service Provider) shares will track the high-growth global
data and voice network and Internet assets and are not expected to pay a cash
dividend. Global Crossing "Class L" (Local Service Provider) shares will track
the performance of the combined companies' existing local telecommunications
assets and are expected to pay an attractive cash dividend.
In the transaction, each U S WEST share will be exchanged for approximately 1.2
shares of Class G or Class L Global Crossing stock, and each Global Crossing
share will be exchanged for one share of either of the two Global Crossing
tracking stocks. At their option, each U S WEST and Global Crossing shareholder
may elect to receive differing percentages of the two tracking stocks, subject
to proration. The exact number of Class G and Class L Global Crossing shares to
be issued in the transaction will be in proportion to the relative valuations of
the Class G and Class L shares, as determined through an appraisal process
shortly before the transaction is completed.
As part of the transaction, U S WEST will make a cash tender offer for
approximately 39 million Global Crossing shares (or approximately 9.5% of Global
Crossing's outstanding shares) at a price of $62.75 per share. The tender offer
will commence within five business days and is expected to be completed next
month.
Annunziata, who was the founder of Teleport - the first competitive local
exchange carrier to compete head-on with regional Bell operating companies -
continued: "A decade and a half after the break-up of AT&T, competition in the
telecommunications industry has spread around the world. Today we are joining
forces with a former regional Bell operating company that knows how to compete
and offers customers a compelling array of integrated voice and data services."
Trujillo, who has created the country's most aggressive local supplier of high-
speed data services, said, "Rarely in business do we have the opportunity to
bring together two leading-edge companies to create a faster, more
entrepreneurial global competitor with unique products and solutions for both
residential and commercial customers. We are confident we can address any
regulatory issues and gain approval for the merger on a timely basis. In
addition to global scope and scale, this merger is also about innovation, speed-
to-market and superior customer service-true to the vision of Gary Winnick,
Global Crossing's founder and largest shareholder."
Annunziata and Trujillo will become Co-Chairmen and Co-CEOs of the combined
company. There will be a 22-member Board of Directors: 10 designated by Global
Crossing, 10 designated by U S WEST, and two selected by mutual agreement.
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The Board of Directors of U S WEST intends to declare a special cash dividend of
$0.215 per share payable to U S WEST shareholders in each quarter prior to
closing. This will increase U S WEST quarterly dividend payments to $0.75 per
share prior to closing. In addition, U S WEST intends to declare a one-time
special cash dividend of up to $1.00 per share (plus the proportionate share of
the unpaid special dividend in the quarter in which the merger closes) payable
to U S WEST shareholders immediately prior to closing.
Merger Benefits
Benefits of the merger, approved unanimously by the Boards of both companies,
include:
- - First Global and Local Service Provider with state-of-the-art domestic and
international backbone facilities and world-class data networking services.
- - High-quality, last-mile access; high-speed data and global reach; enhanced
ability to compete in the projected $1 trillion global telecommunications
market.
- - Leadership position in Internet services, applications support, web hosting
and e-commerce.
- - Greater ability for the local service provider to retain and grow large
business accounts in need of truly national or global voice, data and Internet
services.
- - Combination enables U S WEST, the nation's largest local digital subscriber
line (DSL) provider, to become a powerful national and global data local
exchange carrier.
- - Ability to enhance services in local markets.
- - Strong balance sheet to support further growth.
Composition of Tracking Stocks
The new Global Crossing Class G shares will include:
- - Global Crossing's state-of-the-art global fiber optic network, connecting four
continents and 39 cities in Europe, Japan and the Americas.
- - U S WEST's !NTERPRISE data networking business (including data network
integration services, Internet access, hosted applications and DSL services).
- - U S WEST's frame relay and asynchronous transfer mode (ATM) network, one of
the largest in the world.
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- - U S WEST's wireless PCS business.
- - U S WEST's Internet Yellow Pages directory business.
- - Frontier's state-of-the-art U.S. fiber optic network, connecting 120 cities.
- - Frontier's long distance business.
- - Frontier's GlobalCenter Internet web hosting and data center business.
- - Frontier's CLEC (competitive local exchange carrier) business.
- - New U.S. and international data local exchange carrier (DLEC) businesses.
The new Global Crossing Class L shares will include:
- - U S WEST's 16.6 million local telephone lines in 14 Western and Midwestern
states.
- - Frontier's 1.0 million local telephone lines.
- - The U S WEST Dex printed directory business.
- - Frontier's printed directory business.
The merger is expected to be immediately accretive to Global Crossing Class G
operating cash flow and to Global Crossing Class L earnings per share. The
transaction will be accounted for as a purchase, and is expected to be tax-free
to U S WEST and Global Crossing shareholders.
The new Global Crossing Corporation will be incorporated in Delaware,
headquartered in New York City, and have operations in Denver; Rochester, NY;
Los Angeles; the New York/New Jersey metropolitan area; Minneapolis; Phoenix;
Seattle; London; Tokyo; Amsterdam; Buenos Aires and many other locations
throughout the world.
The transaction is subject to the approval of shareholders of both companies,
expiration of the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act, and approval by the Federal Communications
Commission and other regulatory review. It is expected to close by mid-2000.
Frontier has consented to the U S WEST transaction, and Global Crossing has
modified its merger agreement with Frontier to provide that the number of Global
Crossing shares to be received by Frontier shareholders will be adjusted to
provide a value of $63 per Frontier share as long as Global Crossing shares
trade within a range between $34.56 and $56.78 per share (the collar) during a
pricing period prior to closing of the Frontier transaction. Outside the collar,
Frontier shareholders will
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5
receive a fixed number of Global Crossing shares: 1.1095 shares per Frontier
share at the top end of the collar and 1.8229 shares per Frontier share at the
bottom end of the collar. If the Frontier transaction does not close by December
31, 1999, the $63 per share value will be increased by 7% per annum compounded
daily until closing (unless the Global Crossing share price is over the top end
of the collar). These modifications to the Global Crossing/Frontier merger
agreement will become effective only after shares are purchased in the U S WEST
tender offer for Global Crossing shares.
The transaction is another step in the execution of both companies' aggressive
growth strategies. In June 1998, U S WEST split off its cable assets, MediaOne
Group (NYSE: UMG), to concentrate on its telecommunications and Internet
businesses. Global Crossing announced in March 1999 that it would acquire
Frontier Corporation. Antitrust clearance has been received for the Frontier
acquisition, which is expected to close in the third quarter of 1999.
Salomon Smith Barney, Inc. and Chase Securities, Inc. served as financial
advisers to Global Crossing, and Merrill Lynch & Co. served as financial adviser
to U S WEST. J.P. Morgan & Co. is arranging a credit facility for the U S WEST
tender offer for Global Crossing shares.
About U S WEST
U S WEST provides a full range of advanced telecommunications services -
including wireline, wireless PCS, data networking, directory and information
services-to more than 25 million customers nationally and in some of the
nation's fastest growing communities in 14 Western and Midwestern states
(headquartered in Denver, its larger markets include Denver, Minneapolis,
Phoenix, Portland, Salt Lake City and Seattle). It is the nation's leader in the
deployment of digital subscriber line (DSL) technology. More information about U
S WEST can be found at www.uswest.com.
About Global Crossing
Global Crossing is building and operating the world's most advanced global fiber
optic platform for data, voice, video and Internet transmissions. The Global
Crossing network will span four continents and address 80% of the world's
international traffic. Global Crossing's operations are headquartered in
Hamilton, Bermuda, with offices in Los Angeles; New York City; Morristown, New
Jersey; San Francisco; Miami; London; Amsterdam; Tokyo; and Buenos Aires. More
information about Global Crossing can be found at www.globalcrossing.com.
Statements made in this press release that state either a company's or
managment's intentions, beliefs, expectations, or predictions for the future are
forward-looking statements. It is important to note that both companies'
actual results could differ materially from those projected in such forward-
looking statements. Information concerning factors that could cause actual
results to differ materially from those in the forward-looking statemetns is
contained from time to time in each company's filings with the U.S. Securities
and Exchange Commission (SEC) and is incorporated herein by reference. Copies of
these filings may be obtained by contacting either company or the SEC.
<PAGE>
6
Investors and analysts may contact:
Jensen Chow
310/385-5283
E-mail: [email protected]
Reporters and editors may contact:
Tom Goff
310/385-5231
E-mail: [email protected]
<PAGE>
Exhibit 99.2
Global Crossing / U S WEST
The New Premiere Global and
Local Service Provider
Bob Annunziata Sol Trujillo
CEO CEO
<PAGE>
2
Regarding Forward-Looking Statements
Statements made in this presentation that state the Companies' or management
intentions, beliefs, expectations or predictions for the future are forward-
looking statements. It is important to note that the Companies' actual results
could differ materially from those projected in such forward-looking statements.
Information concerning factors that could cause actual results to differ
materially from those in the forward-looking statements is contained from time-
to-time in the Companies' SEC filings. Copies of these filings may be obtained
by contacting the Companies or the SEC.
<PAGE>
3
Global Crossing / U S WEST / Frontier
. Creates Leading Global and Local Service Provider
. Customer-to-Customer Connectivity and Service Around the World
. Financial Structure Highlights Value and Promotes Growth
<PAGE>
4
The New Global Crossing
<TABLE>
<CAPTION>
Global Crossing Frontier U S WEST
Communications
<S> <C> <C>
International
Fiber Optic . US Fiber . Local Voice,
Network Optic Network Data,
. Data and Internet,
. Connecting Continents Internet and Wireless
. European Terrestrial . Long Distance Services
. Japanese Terrestrial . Local . Broadband
. South American Connectivity Access
Terrestrial . CLEC . Wireless and
Wireline
Network
. All-Digital
Data-Centric
Core Network
</TABLE>
World's Leading Global and Local Service Provider
<PAGE>
5
Global Reach/Local Service
<TABLE>
<CAPTION>
Global Connectivity Cities Customers
<S> <C> <C>
. Voice
Global House . xDSL
. Private Line
Cable . Switching . Integrated
. Routing Services
. Bandwidth Management
. Web Hosting
. Data Centers
</TABLE>
<PAGE>
6
Global Reach / Local Service
<TABLE>
<CAPTION>
[right [right
LOCAL arrow] NATIONAL arrow] GLOBAL
<S> <C> <C> <C>
IP / HOSTED APP U S WEST Frontier Global Crossing
DATA NETWORKS U S WEST Frontier Global Crossing
LONG DISTANCE NA Frontier Global Crossing
BACKBONE U S WEST Frontier Global Crossing
ACCESS U S WEST Frontier Global Crossing
Frontier CLEC Europe/Japan/
South America
</TABLE>
<PAGE>
7
Financial Structure Highlights Value
Business Financial Structure
Global Reach [right and left arrow] GSP - Global Service
Provider
Local Services LSP - Local Service
Provider
Value
Enhanced growth in GSP
Enhanced service in LSP
<PAGE>
8
The Transaction
Initial Tender Offer [right arrow] Corporate Alliance
. U S WEST to Tender Immediately for 9.5% of Global Crossing Shares
. $62.75 Per Share
. Cash Tender Commences Within Five Business Days
<PAGE>
9
The Transaction
The Merger
. Stock-for-Stock Merger of Equals - Following Global Crossing/Frontier
Merger
. Global Crossing/Frontier and U S WEST Shareholders Each Will Own 50%
. Each Global Crossing Share Will Represent 1.0 Shares and Each U S WEST
Share Will Represent Approximately 1.2 Shares in the New Company
<PAGE>
10
The Transaction
The Merger
. Each Share of the New Company Entitles the Shareholder to Elect a Mix of
GSP and LSP Tracking Stocks Subject to Proration If Either Is
Oversubscribed
. Tax-free, Purchase Accounting
. Closing Expected Mid-2000
<PAGE>
11
Amendment to Global Crossing/Frontier Merger Agreement
. Frontier Board of Directors has Consented to Global Crossing/ U S WEST Merger
. Assuming Completion of U S WEST Tender Offer for 9.5% of Global Crossing
Shares:
- Minimum Value to Frontier Shareholders Increased to $63
- Changed Exchange Ratio Range,
. Previous: 1.0919 - 1.7939
. Revised: 1.1095 - 1.8229
<PAGE>
12
U S WEST Special Dividends
. Until the Merger Closes, U S WEST Intends to Pay a Special Dividend of $0.215
Each Quarter Increasing the Quarterly Payment to $0.75 Per Share
. Immediately Prior to Closing, U S WEST Intends to Pay a Special Dividend of
$1.00 Per Share
<PAGE>
13
Two Tracking Stocks
<TABLE>
<CAPTION>
Global Service Provider Local service Provider
(GSP) (LSP)
<S> <C>
. Global Crossing Subsea . US WEST Local Exchange
and Terrestrial Global
Fiber Network . US WEST In-Region Long
Distance
. U S WEST !NTERPRISE Data
Activities . US WEST Private Lines and
Directory Operations
. Frontier US Fiber
Network, Internet, Data, . Frontier Local Exchange
and Long Distance
. Frontier CLEC Operation
. U S WEST Wireless and
Internet Yellow Pages
</TABLE>
<PAGE>
14
Two Tracking Stocks
Proforma 2000 Estimates*
Class G Class L
Global Service Local Service
Provider Provider
Revenue $ 6.0B $13.5B
Adjusted EBITDA $ 1.4B $ 6.7B
Proforma Growth Accelerates Global Enhanced Earnings
Profile Crossing EBITDA Visibility with
Growth to less than Stable Growth
40%
* Proforma as if merger closes January 1, 2000
<PAGE>
15
Local Service Provider Assets
. Distribution Channel for DSL and other Global Service Provider Products
. 17 million Local Access Lines
. Local Service in 25 States
. 7,800 SONET Rings
. $1.2 billion Vertical Services Revenue Stream
. $1.2 billion Revenues from Print Yellow Pages
. Attractive Demographics, Rapid Growth Region
<PAGE>
16
U S WEST Local Network
[Map showing the states of Washington, Oregon, Montana, Idaho, Utah, Arizona,
Wyoming, Colorado, New Mexico, North Dakota, South Dakota, Nebraska, Minnesota
and Iowa]
. 21 SONET ring network
. 94% digital switching
. Data switches
- 417 frame relay
- 133 ATM
. 40,444 miles of fiber cable across 14 states
. DSL in 215 wire centers
<PAGE>
17
Frontier Local Network
Local Access Lines
[Map showing the states of Florida, Georgia, Alabama, Missouri, Pennsylvania,
New York, Ohio, Minesota, Indiana, Illinois, Wisconsin, Louisiana and Montana as
Frontier services territory.]
. NY: 650,000
. Total: 1,034,000
. 34 Cities in 13 States
<PAGE>
18
Global Service Provider Assets
Fiber: 115,000 Route Miles / 2.85 Million Fiber Miles
Data: 173 ATM Switches
454 Frame Switches with over 70,000 Frame Nodes
35,000 DSL Customers
2,000 VDSL Customers
12 Web Hosting / Data Centers
U S WEST Internet Yellow Pages
$1.8 billion of Long Distance Revenue
less than 200,000 ISP Subscribers
Voice: 230,000 CLEC Lines
220,000 PCS Subscribers
Products: Global Voice, Video, Data and IP Applications
<PAGE>
19
Frontier DMS 500 Network
[United States map showing terminal sites and switches of Frontier DMS 500
Network.]
[Legend containing the following information:]
. Completed
. By the end of June '99
<PAGE>
20
Frontier National Network
[United States map showing coverage and routes of the Frontier national
network.]
[Legend containing the following information:]
Network Route Network Miles
------------- -------------
. Base Network - 24 Fibers 13,054 miles
. Southeast Build - 12 Fibers 2,985 miles
. Northwest Network Swap
(WTCI) 1,660 miles
. Western Network Swap
(Enron) 1,896 miles
. Frontier Terminal Site
. Frontier Switch
<PAGE>
21
From Local to National to Global Reach*
[World map showing the routes of PC-1, GAL, PAC, SAC, AC-1, MAC and PEC with
"Growth" indicated for undeveloped areas of Asia.]
*Based on announced networks
<PAGE>
22
Pan European Crossing
[Map of Europe showing the route of Pan European Crossing.]
. [Legend containing the following information:]
. Wholesale Switching
. DSL
. Data and Internet Services
<PAGE>
23
Global Fiber Network*
<TABLE>
<CAPTION>
Frontier New
Communi Global
Global Crossing -cations U S WEST Crossing
<S> <C> <C> <C> <C>
Route 54,900 20,000 40,444 155,344
Miles
Fiber 800,900 348,000 1,700,00 2,848,900
Miles
Count- 18 3 1 19
ries On
Network
Cities On 39 120 44 185
Network
Total Invest- $ 4.9 $ 1.1 $ 1.2 $ 7.2
ment in billion billion billion billion
Announ-
ced system
</TABLE>
*Based on Announced Networks
<PAGE>
24
Addressable Market Explodes
New Global Crossing
Global Crossing Frontier Communications US WEST
$100 billion + $100 billion + $35 billion
International National LD Local
Global Bandwidth and Services $ 1 trillion in 2005
Sources: IDC, ITU, Tom Soja & Associates, Yankee Group and Company Estimates
<PAGE>
25
World's Largest DLEC
Number of Subscribers
<TABLE>
<CAPTION>
1Q99 1999E Reach Market
Value
<S> <C> <C> <C> <C>
USW/GBLX 35,000 100,000 Global $ [arrow
pointing
upwards]
billion
Covad 8,6000 35,000 National $ 4.6 billion
North Point 3,200 NA National $ 5.3 billion
Rhythms 1,255 12,000 National $ 5.3 billion
</TABLE>
While serving 10% of the U.S. population, U S WEST has captured 40% of the
nation's DSL subscribers and 30% of the nations local frame relay ports. These
capabilities will be unleashed to national and global markets.
<PAGE>
26
Web Hosting and Internet Services
[Digital Distribution map]
. 12 Hosting / Distribution Centers
. Over 200,000 Dial-up Internet Customers
. 54 billion Hits per Month
. Extensive Line of Network-Based Applications
. Worldwide IP Network - Tier 1 Peering
. less than 100% Growth Rate
<PAGE>
27
Regulatory Environment
. No Approval Required for U S WEST to acquire 9.5% of Global Crossing Shares
. Combined Companies Prohibited from Originating Long Distance Traffic from U S
WEST Territories Pending Section 271 Approval
. Regulatory Approval for Merger is Expected
. U S WEST Section 271 Approval Efforts Accelerated
<PAGE>
28
Compelling Financial Profile
New Global Crossing*
Revenues less than $ 19 billion
Adjusted EBITDA less than $ 8 billion
Current Market Value less than $ 75 billion
*2000 Company Estimates - proforma as if merger
closed January 1, 2000
<PAGE>
29
Combination Offers Substantial Synergies
. Ability to Combine Back Office and Administrative Functions
. Post 271 Approvals - Owned Network Generates Enhanced Long Distance Margin
and Market Share
. Expand Existing GlobalCenter Web Hosting Business to Include Applications
Hosting via Worldwide Network
<PAGE>
30
Combination Creates New Market Opportunities
. Expansion of Existing DSL Technology to Global Markets With Suite of Existing
Data Products
. Expansion of Existing Voice, Data Transport, Internet Access and Vertical
Services to Global Markets Served by the Global Crossing Global Network
<PAGE>
31
Combination Offers Synergies and Opportunities
Net Present Value ($ Billions)
Market
Synergies Opportunities
Operating Efficiencies $1
Long Distance $2
Global 1 Hop $4
Loss of Bermuda Tax Benefit ($1)
National DLEC $3-6
International Voice, Data
Transport, Internet Access
and Vertical Services $15-30
------
TOTAL $6 $18-36
<PAGE>
32
From Local to Global Reach*
[World map showing the routes of PC-1, GAL, PAC, SAC, AC-1, MAC and PEC with
"Growth" indicated for undeveloped areas of Asia.]
*Based on announced networks
