Hutchison Whampoa's offer for Global Crossing could turn out to be a stalking-horse, according to analysts, after a group of shareholders from the bankrupt company proposed a US$5.5 billion recapitalisation programme. The analysts said the new proposal did not seem realistic, given the difficulty of raising capital from shareholders, but there were likely to be other proposals that would challenge the joint offer by Hutchison and Singapore Technologies Telemedia (STT). A group of Global Crossing shareholders claiming to represent thousands of shareholders have proposed issuing two classes of convertible warrants to raise US$5.5 billion for the undersea cable operator. The warrants could be converted to a shareholding of no more than 62.3 per cent, giving existing shareholders a continuing role in the company. However, the new proposal does not offer any direct funding for Global Crossing. Neither does it propose a haircut for creditors and bondholders. Last month, Hutchison and STT proposed buying 79 per cent of Global Crossing for US$750 million. They asked that the company's US$7 billion debt be forgiven in return for US$300 million in cash, US$800 million in debt and a 21 per cent stake. Existing shareholders would have nothing and bankers would take at least an 84 per cent haircut. A Hong Kong-based analyst of a US brokerage that is among the major creditors of Global Crossing said: 'Which is a lesser of two evils I don't know. Given that the very harsh conditions by Hutchison and [STT] would upset most people, I think their offer is a stalking-horse.' It would not be easy for the two Asian investors to take the prize assets, he said. The deadline for bids for Global Crossing is April 23, after which a United States Bankruptcy Court judge will determine which are qualified. Whether the shareholders' proposal would be a qualified bid in the eyes of the judge would be questionable. A source close to the adviser to the Hutchison-STT consortium suggested the new proposal was not realistic. 'Bankers would say 'I love it', but [can the deal be financed]? No. None of this kind of company will ever raise US$5 billion.' The source suggested Hutchison and STT were still serious despite the issues being raised about national security concerns and conflicts of interest involving Global Crossing executives. A Hutchison spokesman yesterday said the company would not raise the terms for its offer. ING Barings analyst Cusson Leung said investors had not factored in potential gains from Hutchison taking over Global Crossing and therefore would not be disappointed should it fail. 'If the deal goes through, it is positive for Hutchison in the long-term. If not, well it does not make any difference. 'Investing in Global Crossing is no different from investing in business in Vietnam and Sri Lanka - it is something that could blossom after four or five years,' Mr Leung said.