Glogal Crossing | Founding and early growth

Global Crossing was founded by Gary Winnick and three business associates in 1997 through Pacific Capital Group, Winnick's personal venture group, which had experienced mixed results in its twelve-year history. In 1997, Global Crossing raised $35 million of capital from the CIBC Argosy Merchant Funds (later Trimaran Capital Partners). The heads of the CIBC Argosy Merchant funds were former associates of Winnick from his days in the 1980s as a salesman at Drexel Burnham Lambert under Michael Milken. CIBC would ultimately realize a gain estimated to be $2 billion from its relatively small equity investment in Global Crossing, making it one of the most profitable investments by a financial institution in the 1990s.

 From 1997 until 2002, Winnick held the title of chairman; Lodwrick Cook, former CEO of Atlantic Richfield Company (ARCO), was hired by Winnick in 1998 as co-chairman. John Scanlon became Global Crossing's first chief executive officer the same year. In what would become a trend with Global Crossing's chief executives, Scanlon's leadership was short-lived, and in February 1999, he was replaced by Robert Annunziata, who had resigned his position as president of AT&T's business services group to "build a company from start to finish." Annunziata oversaw the rapid expansion of the company, including the purchase of Frontier Corp. at a cost of $11.2 billion and the $850 million purchase of Global Marine Systems. After only a year though, in March, 2000, Annunziata resigned. During his time as CEO, Global Crossing had gone from a medium-sized company of about 150 employees to an international giant with over 14,000 employees.

Taking over as CEO, Leo Hindery, another AT&T executive, had joined the company a few months earlier as head of its webhosting division, GlobalCenter. Hindery took the helm at a critical turning point for the company. In March, the month Hindery assumed command, Global Crossing's stock had reached a high of $61 per share. A month later, however, the stock price had fallen to just $25 a share. The company's filing for an offering of $2.5 billion in common and convertible preferred shares was cut in half. Many of the original investors bailed out at that time as well, cashing out most or all of their holdings for astounding gains. Gary Winnick, who continued with his company, himself made another $260 million at the April, 2000 stock offering. CEO Hindery projected the company would be cash-flow positive by early 2002, but two months later, in October, 2000, he quit, submitting his resignation after just seven months with the company. This took place after the sale of the GlobalCenter division to Exodus Communications, in a deal in which Hindery made $251 million.

Hinderey was replaced by Thomas Casey, a forty-eight year old lawyer who came to Global Crossing from Merrill Lynch, where he was co-head of the global telecom investment banking group. Prior to that time, Casey had worked as an attorney for the Federal Communications Commission and the Department of Justice. Reports by individuals close to the company to the media suggested conflicts and power-struggles between Mr. Winnick and CEOs Annunziata and Hindery.

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