Posted on 07/09/2002 6:43:20 PM PDT by Liz
JACKSON, Miss. (AP) - WorldCom Inc. says it will know within three weeks whether it will pursue what would be the largest corporate bankruptcy filing in U.S. history.
The Clinton-based long-distance and data services company is on the verge of bankruptcy after disclosing it disguised $3.9 billion of expenses as capital expenditures in a bid to appear more profitable.
WorldCom executives clashed with former auditors Arthur Andersen LLP Monday during Congressional hearings over who's to blame for the improprieties, which prompted President Bush ( news - web sites) to propose tougher penalties for company officials who lie on financial statements.
As the WorldCom case unfolds, the company continues to negotiate with lenders for $5 billion in critical funding as it was doing before news of the accounting scandal broke June 25.
The company said Tuesday it also was awaiting word from banks on interim financing that could avert a bankruptcy filing at least for now.
Another option is a debt-for-equity swap with bondholders as part of a prepackaged Chapter 11 filing. A company spokeswoman said chief executive John Sidgmore has been contacted by certain bondholders, but no formal discussions have started.
"We're fighting for our life," Sidgmore testified Monday before a House panel investigating the debacle, which is under investigation by the Securities and Exchange Commission and the Justice Department.
WorldCom has laid off 17,000 of its 80,000 workers, and Sidgmore has said additional layoffs are possible. The company, which has $30 billion in debt, also is looking to sell parts of the business to raise cash.
Telecom analyst Pat Comack of Guzman & Co. in Miami said WorldCom's next move bankruptcy or not places bondholders and lenders in a tenuous situation.
Comack said any new bank loans almost certainly would be secured with collateral, placing those lenders at the top of the creditor's list should a bankruptcy filing eventually occur.
On the other hand, he said, a debt-for-equity arrangement would give bondholders who hold $26 billion in bonds greater leverage and a better chance of recovering their investment.
Without debt, Comack said, a leaner WorldCom could emerge from bankruptcy and possibly survive on its own or become a takeover target.
With more than $100 billion in assets reported at the end of March, a WorldCom bankruptcy would be twice as large as Enron's slide into Chapter 11 last fall and four times as big as Global Crossing's in January.
The company's shares have plunged from more than $64 in June 1999 to 21 cents Monday.
Reorganization as it appears in the headline is reference to reorganization of the company under the bankruptcy code. It is a term of art.
In short, it means the company will reorganize it's ownership and it debt. In this process, it will put forth a plan for payment of stock/shareholders and other creditors both secured and unsecured and a business plan that will show it can be profitable. The business plan must be approved by the courts and the pay off of debt needs the support of creditors.
As far as I am concerned, the company has always been a scandal. One only need look at its past business practices - slamming customers, double billing, rough treatment of customers - to see they should have gone out of business a long time ago.
MCI World Com...the sooner you die the better.
We figured we must have been small fish considering some of their bandwidth options are easily $90,000/mo. (100 Mbits. Before you count in the cost of "real estate" which could easily add tens of thousands more for a large cage.)
The State of New York Office of General Services stated it is currently NOT taking steps to cancel it's contract with Worldcom for Aggregated Telecommunications Services. But I also don't know many folks which are signing up with Worldcom either. For more info, see:
http://www.ogs.state.ny.us/purchase/snt/awardnotes/7701011134pm.pdf
Interesting, I had a call yesterday from a firm called "The Neighborhood"? which the cold caller stated was associated with MCI and that they could easily save us "50%" on our Interstate Outbound LD charges. I told him what we pay for Outbound Interstate (day or night) - 2.81 cents per minute - and he said after pause, "Yes, we can beat that". Highly doubtful, but we'll see. They're desperate...
Another point concerning billing. We had Verizon bring in a T3 for a dedicated "broadcast quality" video link. Cost about $1500/month. They forgot to bill us for 7-8 months and when we brought it to their attention, they said "it's on the house". Companies are either flush with cash or going under - we're finding very little in-between...
Well, that says it all, doesn't it.
Agreed. I wonder if somehow the services they said forget about paying for were written off as some sort of donation?
Clinton {{{{blech}}}}}.
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