A Hong Kong telecommunications company may agree to limit its role in managing Global Crossing Ltd. to win U.S. government approval to buy the fiber-optic network operator, which is in bankruptcy protection, people familiar with the plan said.
The Committee on Foreign Investments in the United States, which is chaired by representatives of the Treasury Department, has asked Hutchison Whampoa Ltd., which is controlled by Hong Kong billionaire Li Ka-shing, and its partner, Singapore Technologies Telemedia Pte., to provide assurances that the acquisition of Global Crossing's network will not compromise national security.
Global Crossing's network transmits communications for U.S. agencies, and the committee had concerns that China might interfere with Hutchison's management. Under the existing plan, approved by a bankruptcy judge, the companies would have joint say over management. The parties are now discussing a plan in which Hutchison may act as silent partner, making an investment and vesting its management control in another party, sources familiar with the plan said.
"The government is in the driver's seat and can say, 'We're not going to allow you to take over this company unless you do what we tell you to do,' " said Ivan Eland, a senior fellow at the Independent Institute, an Oakland, Calif.-based policy research organization.
Steve Lipin, a U.S.-based spokesman for Hutchison, said the process "is highly confidential and therefore we cannot comment."
"We continue to cooperate with the U.S. government to address any concerns," he said.
Hutchison and ST Telemedia last year agreed to take a 61.5 percent stake in Global Crossing after the Bermuda company emerges from Chapter 11 bankruptcy protection, possibly this year.