Business & Finance
Arthur Andersen LLP experienced perhaps its most difficult weekend since energy trading giant Enron Corp., for which it served as auditor and consultant, declared bankruptcy. Pharmaceutical giant Merck & Co., one of Andersen's biggest clients, announced it was severing their 31-year relationship. Pending shareholder approval, Merck said PricewaterhouseCoopers, another of the "Big Five" accounting firms, will take over as outside auditor. In addition, Andersen agreed Friday to pay $217 million to settle a lawsuit alleging it failed to uncover fraud at yet another client, the Baptist Foundation of Arizona, a faith-oriented investment fund. That figure soon may be dwarfed, however, analysts said. Andersen reportedly has floated a $750 million settlement offer to lawyers representing Enron shareholders.
A new offer for bankrupt Global Crossing Ltd. is expected as soon as this week, the Los Angeles Time reported. The newspaper said it likely will come from Gores Technology Group, a Los Angeles company that specializes in buying and managing telecommunications and software enterprises. Gores has not indicated what it will bid, the Times said. A $750 million takeover proposal for Global Crossing already has been made jointly by Hong Kong-based Hutchison Whampoa Ltd., a conglomerate believed to have links to the Chinese military, and Singapore Technologies Telemedia. But on Friday, FleetBoston Financial Corp., which is owed $77 million by Global Crossing, filed an objection in bankruptcy court to the Hutchison-Singapore offer. FleetBoston complained that the $750 million proposal is too low.
Sprint, the US's No. 3 long-distance telephone company, won a new $1 billion loan, pledging its directory publishing business as collateral. Investors had worried that the Kansas City, Mo.-based carrier might have to follow the lead of other telecommunications companies and use up its own credit line from banks. But a Sprint spokesman said the loan - from Citibank and Germany's Deutsche Bank AG - satisfied its cash requirements for the year.