US politicians had raised national security concerns about Hutchison becoming a shareholder in Global Crossing, and help lift it out of Chapter 11, because the conglomerate in based in Hong Kong, part of Communist China.
The move leaves Hutchison’s partner in the planned deal, Singapore’s ST Telemedia, poised to take sole control of Global Crossing.
Hutchison subsidiary Hutchison Telecommunications Ltd and Singapore Technologies Telemedia Pte Ltd agreed a deal with a US bankruptcy court in August 2002 under which they would pay $250m for a 61.5% stake in bankrupt Global Crossing
However, the deal ran into opposition from the Committee on Foreign Relations in the United States, which can block overseas takeovers of US companies on security grounds.
Rival telecoms group IDT Corp launched its own belated and unsuccessful bid for Global Crossing in February. At the time company chairman Howard Jonas questioned how a foreign telecommunications company, based in communist-controlled China could gain control over a company that would give them access to some of our government’s and major corporations’ most sensitive phone conversations.
In a statement yesterday, Hutchison said that despite working closely with the relevant US authorities to address regulatory concerns, it had not been possible to reach an agreement that satisfied all parties in a reasonable time frame.
Given that that deal was not core to Hutchison’s global telecommunications strategy the firm said it had decided to back out of the deal.
Source: Computerwire
