According to the Company’s FORM 10-Q for the quarterly period ended September 30, 2003, on June 12, 2002, certain plaintiffs filed a consolidated complaint captioned In re Global Crossing Ltd. Initial Public Offering Securities Litigation in the United States District Court for the Southern District of New York alleging that certain current and former officers and directors of the Company violated the federal securities laws through agreements with underwriters in connection with the Company’s initial public offering and other offerings of Company shares. The Complaint seeks damages in an unstated amount, pre-judgment and post- judgment interest, and attorneys’ and expert witness fees. This consolidated action involving the Company is further consolidated in the United States District Court for the Southern District of New York with cases against approximately 309 other public issuers and their underwriters under the caption In re Initial Public Offering Securities Litigation. Pursuant to the automatic stay of litigation imposed by the Bankruptcy Code, the Company was not a defendant in this action during the pendency of its chapter 11 reorganization. The Company believes that any liability it may have had in respect of this action was subject to indemnification by the firms that acted as underwriters in the applicable securities offerings. Any monetary liability was in any event, discharged upon consummation of the Company’s Plan of Reorganization.
The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) the Underwriter Defendants had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the Underwriter Defendants allocated to those investors material portions of the restricted number of Global Crossing shares issued in connection with the Global Crossing IPO; and (ii) the Underwriter Defendants had entered into agreements with customers whereby the Underwriter Defendants agreed to allocate Global Crossing shares to those customers in the Global Crossing IPO in exchange for which the customers agreed to purchase additional Global Crossing shares in the aftermarket at pre-determined prices.