Teleglobe Granted Creditor Protection

Teleglobe, Inc. confirmed that the Ontario Superior Court of Justice has granted the company an order providing creditor protection, the Canadian equivalent of Chapter 11 bankruptcy protection.

by Roy Mark of www.internetnews.com [May 20, 2002]

The order will provide Teleglobe, Inc., a Canadian backbone provider with U.S. operations based in Reston, Va., with time to complete its reorganization plan announced last Wednesday.

Teleglobe plans to exit its hosting business and portions of its data transmission business to facilitate its renewed focus on its core operations. By exiting these businesses, the company hopes to free itself from the high costs associated with recently built infrastructure, primarily developed to support the discontinued data and hosting operations.

As part of the reorganization strategy, Teleglobe recently reduced its workforce by 850 people. Approximately 950 jobs will remain at the company to support the core business and its restructuring process.

Teleglobe also announced it has secured $100 million of debtor-in-possession financing from BCE Inc., the Canadian telecommunications company that acquired Teleglobe for $4.7 billion two years ago. The financing will support the continued operations of the core business, including the servicing of customers and the payment of employee wages and benefits.

The reorganization also calls for John Brunette to take over the role of chief executive officer to oversee the implementation of the overall strategy and to lead the financial restructuring process and the sale of non-strategic assets and businesses. Previously, Brunette served as Teleglobe's executive vice president and chief administrative officer.

Executive vice president of voice, Serge Fortin, has been appointed as chief operating officer with the mandate to lead the operations of the core voice and related data business. Teleglobe's board of directors has accepted the resignation of Charles Childers, formerly the company's president.

"Our primary objective is to maximize the value of the company for all stakeholders," said Brunette. "This strategy allows us to be free of a financial burden and focus on our core business, which has been built over a 50 year period."

In August, the international Internet backbone provider eliminated approximately 20 percent of its workforce. The reductions-in-force, which amounted to 450 positions, were primarily centered in the company's Reston facilities.

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