Singapore Technologies Tele-media (STT) said yesterday it had won approval to acquire a majority stake in bankrupt US telecoms group Global Crossing, ending a drawn-out bid that was dogged by opposition from US security and intelligence services.
Global Crossing and STT issued a joint release saying the US Federal Communications Commission (FCC) had approved the Singapore company's application to take control of the fiber-optic firm.
"We're pleased to have received approval from the FCC," STT's president and chief executive, Lee Theng Kiat, said in the statement. "Now we look forward to building on this progress to help expand and strengthen Global Crossing's business in the United States and worldwide."
Approval by US regulators is the last hurdle for Global Crossing's rise out of bankruptcy under US laws after it filed for bankruptcy protection in early next year with US$12.4 billion in debt.
"Upon emergence from bankruptcy, Global Crossing will be well positioned to continue integrating and building its services worldwide, and expanding its relationships with existing and new customers," Lee said.
Global Crossing chief executive John Legere described the FCC's approval of the deal as a "major milestone."
"After 20 months of restructuring, Global Crossing is poised to emerge with an unrivaled IP-based [internet protocol] net-work, a growing portfolio of products and services, and a firm base of 75,000 customers," Legere said.
STT, a subsidiary of Singapore government investment arm Temasek Holdings, had offered US$250 million for 61.5 percent of Global Crossing.
This would enable STT to take control of 160,000kms of state-of-the art submarine cables that connect more than 200 cities. The network had cost US$15 billion to build.
Officials from the FBI, CIA and the Pentagon, which use the company's services, had objected to a foreign firm controlling a company seen as crucial to national security.
The US Department of Homeland Security had also expressed reservations about the deal as Global Crossing provides the US and its key allies with commercial and military Internet links.
However US President George W. Bush said last month he would not block the bid following an endorsement from Singaporean Prime Minister Goh Chok Tong.
An STT spokeswoman told reporters that to ensure security concerns are protected, the deal includes a guarantee for US law enforcement agencies to access Global Crossing's network in the US for investigations.
Access by foreign governments to classified information carried over the network will also be restricted, and the company's board must be made up of US citizens who have obtained security clearances from US authorities.
STT will also subject certain staff members to a screening process agreed to by the US justice, defence and homeland security department.
These agencies will devise guidelines for visits to Global Crossing facilities for security reasons, the spokeswoman added.
Hong Kong-based Hutchison Whampoa had earlier wanted to buy Global Crossings but backed out after failing to ease US security concerns.
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