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Global Crossing, the high-speed communications network operator that filed for bankruptcy court protection last year, had sought an extension until October that would preserve STT's exclusive takeover rights so the two companies would have more time to seek U.S. approval for the deal.

"The debtors have shown the requisite good cause for an exclusivity extension ... they've given me no reason to believe that they are abusing their exclusivity rights," Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York said in his ruling.

Telephone company XO Communications Inc. (OTC BB:XOCM.OB - News), which is controlled by billionaire investor Carl Icahn, had launched an unsolicited takeover offer for Global Crossing and had objected to the requested extension.

XO, Global Crossing's bank lenders, and others had contended that Global Crossing should not be exclusively locked into a deal with STT since that pact faces uncertain regulatory approval due to potential concerns about foreign ownership of strategic telecommunications assets. STT is a unit of Temasek Holdings, the investment arm of the Singapore government.

Judge Gerber said the bankruptcy court had "neither the role nor the expertise" to predict the outcome of the regulatory process, and had no role in determining whether Global Crossing's assets should be sold to other bidders or under what terms.

"The issues before me are much narrower," he said.

Icahn declined to comment.

REGULATORY REVIEW SEEN LASTING UP TO THREE MONTHS

In hearings last week, a witness estimated that the regulatory review process would take about one to three more months, the judge said. Global Crossing and STT have declined to comment on the specific issues under review.

XO, which has increased its offer to acquire Global Crossing's assets or debt four times, had argued that Global Crossing does not have the luxury of waiting to see if the STT pact wins approval, contending the bankrupt U.S. company faces a cash crunch.

The judge, however, said Global Crossing has "been attentive to their liquidity needs," and is in talks with various financial firms to secure debtor-in-position funding in the range of $75 million to $150 million. Global Crossing, which operates a high-speed communications network reaching 27 countries, had $537 million in cash as of May 31.

"While we appreciate the interest shown by other companies in Global Crossing's business ... we view the purchase agreement with ST Telemedia as the most promising vehicle to ensure our successful emergence (from bankruptcy)," Global Crossing's Chief Executive John Legere said in a statement.

STT said the extension marked an important step forward.

Without the extension, Global Crossing had warned the deal would likely fall apart since STT would have no protection from rival bids and it would face additional expenses to pursue an uncertain deal. Additionally, Global Crossing had said it would be difficult to pursue regulatory approval without one committed purchaser.