1998 IPO
2002 Filed for bankruptcy
2003 S'pore Technologies Telemedia Pte Ltd buyout
2003 Relisted
2011 Accquired by Level 3 Communications
2017 Acquired by CenturyLink
US$1.7B cash earned in this investment and it had nothing to do with Temasek !
Global Crossing:
GC was an internet backbone service provider. It served more than 700 cities in 70 countries. It was a tier 1 carrier which means an internet protocol or IP network which exchanges data traffic with other tier 1 carriers free-of-charge. This is why our VOIP calls are basically free. It provided a host of services like peering, virtual private networks, leased lines, audio and video conferencing, long distance telephone, managed services, dialup, colocation centres and VoIP.
In the hey days of the Dot-com boom, GC went on a shopping spree and bought out a few big names, built fibre-optic networks, undersea cables, etc. By the time it IPO, its valuation was US$46B, a behemoth in those days.
Telecommunication business required massive capital to build the infrastructure. The era of cheap money and high capital liquidity saw plenty of investors willing to throw trillions of 4 into the sector. GC had a massive debt of about US$13B and it collapsed when the dot.com bubble burst in 2001. For all it's market value, GC never made a single $ profit in it's entire life.
In 2002 GC filed for bankruptcy.Stockholders got nothing, employees got a bad deal. But executives walked away with millions having sold a lot of their shares after IPO. Founder Gary Winnick, walked away with US$450M for early disposal of his shares.
S'pore Technologies Telemedia Pte Ltd teamed up with Whampoa Hutchinson HK to buyout GC. Hutchison backed out due to regulatory resistance (for it's China connection). STT went solo. STT pumped in US$250M capital and US$200M debt. In the recapitalisation, STT got 61.5% of the new equity in 18m Preferred Shares and 6.6M Common Stocks. Secured and unsecured creditors received 15.4M Common Stocks.
STT is an active investor. It put in directors and new management, clean up the finances and revamped the organisation. By 2004 GC was able to relist on the bourse again. Some lawsuits against ex-managers were settled.
However, there was no magic STT touch. The shares remained laggard from 2004 to 2011 with long periods of suspension and trading below 1 cts. Profits were still elusive.
Total invested:
Divestment: Salvation for STT came in the form of a share only M&A by another and bigger internet infrastructure player, Level 3 Communication.
ROI on GC investment was roughly US$266M (US$840M-US$574M) which was about 3.9%pa over 10 years. Nothing much to crow about.
GC was an internet backbone service provider. It served more than 700 cities in 70 countries. It was a tier 1 carrier which means an internet protocol or IP network which exchanges data traffic with other tier 1 carriers free-of-charge. This is why our VOIP calls are basically free. It provided a host of services like peering, virtual private networks, leased lines, audio and video conferencing, long distance telephone, managed services, dialup, colocation centres and VoIP.
In the hey days of the Dot-com boom, GC went on a shopping spree and bought out a few big names, built fibre-optic networks, undersea cables, etc. By the time it IPO, its valuation was US$46B, a behemoth in those days.
Telecommunication business required massive capital to build the infrastructure. The era of cheap money and high capital liquidity saw plenty of investors willing to throw trillions of 4 into the sector. GC had a massive debt of about US$13B and it collapsed when the dot.com bubble burst in 2001. For all it's market value, GC never made a single $ profit in it's entire life.
In 2002 GC filed for bankruptcy.Stockholders got nothing, employees got a bad deal. But executives walked away with millions having sold a lot of their shares after IPO. Founder Gary Winnick, walked away with US$450M for early disposal of his shares.
S'pore Technologies Telemedia Pte Ltd teamed up with Whampoa Hutchinson HK to buyout GC. Hutchison backed out due to regulatory resistance (for it's China connection). STT went solo. STT pumped in US$250M capital and US$200M debt. In the recapitalisation, STT got 61.5% of the new equity in 18m Preferred Shares and 6.6M Common Stocks. Secured and unsecured creditors received 15.4M Common Stocks.
STT is an active investor. It put in directors and new management, clean up the finances and revamped the organisation. By 2004 GC was able to relist on the bourse again. Some lawsuits against ex-managers were settled.
However, there was no magic STT touch. The shares remained laggard from 2004 to 2011 with long periods of suspension and trading below 1 cts. Profits were still elusive.
Total invested:
US$250,000,000
| ( 18,000,000
| Preferred stocks
| |
( 6,600,000
| Common stocks
| ||
US$200,000,000
| 16,579,286
| Common stocks
| Convertible Notes exercised on 27 Ag 2007
|
US$123,882,820
| 6,163,145
| Common stocks
| There were some option trades and an unusual purchase of 6,226,145 shares on 30 May 2006 @ $20 when market was below 1 cts.
|
US$573,882,820
| 47,342,431
| Total
|
Divestment: Salvation for STT came in the form of a share only M&A by another and bigger internet infrastructure player, Level 3 Communication.
Deal terms: GC shareholders received 16 x L3 shares for each GC share held. STT got 47,342,431 x 16 = 757,478,896 (28.4%) of L3 shares. At the time, L3 share was about $1.11 thus giving STT's holdings of GC a valuation of about US$840m.
ROI on GC investment was roughly US$266M (US$840M-US$574M) which was about 3.9%pa over 10 years. Nothing much to crow about.
Level 3 Communications Inc:
L3 was also a major internet backbone provider and much bigger than GC. The deal brought together 2 companies that had spent heavily building their network infrastructure during the dot.com years but could not make profits and balance sheet badly hurt by the Dot.com bust.The synergies allowed huge savings in operating cost, great reduction in infrastructure development expenditure, expanded global reach, it allowed L3 to focus more on higher margin enterprises market than moving the mass market data, and it provided better customer experience.
On recapitalisation, L3 shares went for a reverse stock split of 15:1 in Oct 2011. STT's holdings were converted to 50,498,593 shares. From 2011 to 2015 STT purchased in open market another 14,533,074 at average price of US$39.31 = US$572,552,852. By then STT's investment was US$1.414B and number of shares held 65,031,667.
On recapitalisation, L3 shares went for a reverse stock split of 15:1 in Oct 2011. STT's holdings were converted to 50,498,593 shares. From 2011 to 2015 STT purchased in open market another 14,533,074 at average price of US$39.31 = US$572,552,852. By then STT's investment was US$1.414B and number of shares held 65,031,667.
Divestment: 31 Oct 2016 L3 agreed on a cash and share M&A by CenturyLink.
Deal Terms: L3 shareholders received $26.50 per share in cash (without interest) and 1.4286 shares of CL stock for each Level 3 share they owned.
STT received US$1,723,330,175 cash (65,031,667 x US$26.50) and 92,904,239 shares in CenturyLink. At 31 Oct 2016 CenturyLink share was about US$23 which put its value at US$2,136,797,507. The merger puts STT's holdings in L3 at a valuation of about US$3.860B. That means an ROI of US$2,446 (US$3,86B0-US$1,414B) for 6 years or roughly 18.22%p.a. A fantastic return.
CenturyLink:
Telecommunication sector is dominated by AT&T and Verizon. It is a high infra cost and high debt business environment and all players whether in wireless or cables. big or small, are challenged to make profits.
CL is the second largest U.S. communications provider to global enterprise customers. It has customers in more than 60 countries It helps customers manage increased network and IT complexity and provides managed network and cyber security solutions that help protect their business.
The combination of CL and L3 creates a leading global network services company that provides customers a wide range of high-quality technology solutions over a secure and reliable fiber-rich network. CL's network now connects more than 350 metropolitan areas with more than 100,000 fiber-enabled, on-net buildings, including 10,000 buildings in Europe, Middle East, Africa, and Latin America.
Singapore Technologies Telemedia Pte Ltd:
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Singapore lacks the entrepreneurs to create world beaters in various sectors of the economy. The government uses state enterprises or GLCs to pursue this mission but due to the size of the local market, theses ventures have to be created overseas.
STT is a strategic investor focused on investing in, operating and managing a portfolio of companies and investments in the communications, media and technology space globally. STT’s key business segments comprise communications and media services, enterprise services, data centres and emerging technologies.
STT is a wholly owned subsidiary of Temasek Holdings. It is an active investor and not a mere investment holding vehicle of Temasek.
Global Crossing was apparently an STT initiative to build an internet-infrastructure provider company. STT saw the opportunity to buyout on the cheap a heavy infrastructure company. The investment was booked under STT Crossings Pte Ltd, which was a subsidiary of STT Communications Pte Ltd, itself fully-owned by STT. The folks of STT put in management and effort but was unable to drive GC forward profitably. From a near disaster involvement with GC and L3, STT pulled off more than US$2B investments gains with the eventual M&A by CenturyLink. It was strictly STT independent management effort.
This investment has since been transferred to other investment vehicles -- Ellington Investments Pte Ltd and Everitt Investments Pte. Ltd, which are owned by Bartley Investments Pte. Ltd, itself owned by Tembusu Capital Pte Ltd, a wholly owned investment vehicle of Temasek Holdings Pte Ltd..
It would appear CenturyLink is now merely a passive investment by Temasek which is still holding on to a major stake..
Global Crossing was apparently an STT initiative to build an internet-infrastructure provider company. STT saw the opportunity to buyout on the cheap a heavy infrastructure company. The investment was booked under STT Crossings Pte Ltd, which was a subsidiary of STT Communications Pte Ltd, itself fully-owned by STT. The folks of STT put in management and effort but was unable to drive GC forward profitably. From a near disaster involvement with GC and L3, STT pulled off more than US$2B investments gains with the eventual M&A by CenturyLink. It was strictly STT independent management effort.
This investment has since been transferred to other investment vehicles -- Ellington Investments Pte Ltd and Everitt Investments Pte. Ltd, which are owned by Bartley Investments Pte. Ltd, itself owned by Tembusu Capital Pte Ltd, a wholly owned investment vehicle of Temasek Holdings Pte Ltd..
It would appear CenturyLink is now merely a passive investment by Temasek which is still holding on to a major stake..
Return to Portfolio Compilation
If you like to see new microblogs of troubled assets as and when they are are published, please submit your email in the box on the top, right. thank you.
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