Is Global Crossing Out of the Dog House?

This is a partial transcript from Your World with Neil Cavuto, December 10, 2003, that was edited for clarity.

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NEIL CAVUTO, HOST: Global Crossing may be out of bankruptcy, but out of the dog house? It was once one of the most high-flying stocks on Wall Street before it crashed and burned. Now, nearly two years after going bust it is up to our next guest to bring the troubled telecom back. Joining us now is John Legere, he is the CEO of Global Crossing.

John, good to have you.


CAVUTO: You are out, but you say you are going to have a different strategy, you’re not taking on the big boys, who are you taking on?

LEGERE: Well, I mean, A, we’re out, that is a big message because we now we can acquire new customers. Our strategy has changed during the time period we have been into Chapter 11. Most people know us know as selling capacity to carriers. What they don’t know is we also do 2 billion minutes a month of voiceover Internet protocol. We’re going to sell to carriers, we’re going to sell to wireless players, but we’re also going to sell advanced services, IP services to multi-national corporations, because, Neil, what we have coming out of bankruptcy, the network, still now, reaches 500 cities in 50 countries and has an IP ecosystem on it that is unmatched.

CAVUTO: All right, well, you obviously know the jargon well, but John, the fact of the matter, as I hear from those who know you well and commend you for turning this around, is that you are fortunate you have got some pretty sucky competitors, you know, Qwest and L-3 are in a heap-load of problems of their own. Does that help you that they are hurting?

LEGERE: Well, I have nothing bad to say about them, because these are customers of mine, Neil. And the industry right now, everybody is striving to do the same thing, and no one has done it well. Serve multi-national customers in a seamless way and move them to this promise of a converged suite of IP services. They are all trying to do the same thing. The good news is we have got the capabilities, we can also sell it to them as well. So it is good news for those same players as well, customers are the winners.

CAVUTO: You know, John, one of the issues that came up here is Gary Winnick, your predecessor, A, what ever happened to him and what is he doing now?

LEGERE: Well, Gary was the chairman of the board, he was never the operating chief executive officer. And he left his role with Global Crossing on the board over - about a year ago.

CAVUTO: They never pursued criminal charges, right?

LEGERE: The investigation by the Securities and Exchange Commission on the company is not concluded yet and as far as the individual actions that were filed against former directors and officers, those are pending as well. But, I don’t know the status of those investigations, we have nothing to do with.

CAVUTO: All right. Because he left, he cashed out stock - some more than $700 million and a lot of people say, well, guilty or not it certainly looks bad. Do you think that looks bad?

LEGERE: You know, I think the one thing today that we should give credit for is an amazing thing was created, and it’s going forward. That idea started with Gary, the issues associated with the dealings of the company, those will run their course.

CAVUTO: But there is a lot of baggage with your company, I’m not saying you created it, but there is a lot of baggage. People look at Global Crossing and you guys were poster child for abuse.


CAVUTO: How do you convince customers, hey, we’re back, we’re nice, yadda yadda?

LEGERE: A bunch of things we announced this week, Neil, is we announced audited results for 2001 and 2002, so the company has clearly filed all of its returns with a clean audit. Second, is we announced a new board of directors. This is a who’s who, it’s a whole new corporate governance model. We have a new owner in Singapore Technologies Telemedia.

CAVUTO: And they’re a 61 percent owner, right?

LEGERE: Sixty-one-and-a-half percent.

CAVUTO: So do they have you on a very tight leash or what?

LEGERE: We have a board of directors that if you read the names, they are a who’s who, and a very serious group that’s going to provide the kind of governance that I think customers and investors are going to want to see. And they’re going to feel very good about.

CAVUTO: I asked you this the last time you were here, John, just curious, this restitution fund that Gary Winnick set up, the $25 million of his own money, did anyone ever get a penny of that?

LEGERE: You know, the $25 million, Neil, it went straight from Gary as he intended into a fund. There was procedural issues, tax issues, legal issues. And it’s now - there has been a way forward through a 401(k) that has been given to Gary. And that money will find its way forward.

CAVUTO: But after all this time, you see what I’m saying, after all this time, people who felt they got screwed, they are still not getting any money on it.

LEGERE: But Neil, that money will go where it intended.

CAVUTO: When, when?

LEGERE: That’s directly between Gary and the people he wants to give it to. Let’s celebrate one thing together here today, Neil, this company is going forward.

CAVUTO: You can’t blame people for being bitter, though, right?

LEGERE: Listen, the people that I most feel for, of course, are the fact that this company grew fast, and this stock, you know, is something that did not move forward, so people lost money, but, you know, we’re going to try to do our best to regain confidence of shareholders moving forward.

CAVUTO: All right. John Legere, the man shepherding this company, Global Crossing, out of bankruptcy and now on its way back.

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