Business & Finance

By Compiled from wire service reports by Robert Kilborn and Kristen Broman-Worthington

March 4, 2002

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.