WORLDCOM STOCKHOLDERS' BOYCOTT GROWS BY OVER 1000 PER DAY

MSNBC Online | June 6, 2003

[grania]

WorldCom Stockholders' Boycott Grows By Over 1,000 per Day June 06, 2003 1:50:00 PM ET

CHICAGO, June 6 /PRNewswire/ -- A group of WorldCom stockholders has announced that over 4,500 customers of WorldCom/MCI Inc., (OTC Bulletin Board: WCOEQ, MCWEQ), intend to cancel their long distance or internet service if the company's current bankruptcy reorganization plan is approved.

"There seems to be a groundswell of anger at big money's use of the bankruptcy process to take assets from individual stockholders," said Neal Nelson, Spokesperson for the WorldCom/MCI Stockholders Group, "We are receiving over 1,000 emails a day indicating that people intend to cancel their WorldCom/MCI service if the current bankruptcy plan is approved."

"The WorldCom bankruptcy reorganization plan would essentially eliminate the company's debt, but it would also transfer 100% ownership of the 'new MCI' to the current bondholders and leave the current WorldCom and MCI stockholders with nothing," continued Nelson, "The stockholders favor an alternate plan with partial debt reduction, where the bondholders would get partial ownership of the new company and the current stockholders would be given some equity in the new firm."

"Through total domination of the bankruptcy committees, the bondholders have prevented consideration of a compromise plan," added Nelson, "The only avenue left for effective protest against this plan is to threaten a boycott of the 'new MCI'."

Any current, or possible future, WorldCom/MCI customer can help support the stockholders by sending an empty email message to: cancel.mci@nna.com

By sending an email, an individual would be stating that, if the bankruptcy plan is approved in its current form, that individual does not intend to do business with the "new MCI".

More information about this threatened boycott can be found on the WorldCom/MCI Stockholder Web Site at http://www.wcom-iso.com

Stockholders that are interested in the group, but do not have access to the World Wide Web, may contact the group's spokesperson, Neal Nelson, at (847) 851-8900, email: neal@nna.com .

The stockholder group is totally independent and is not sponsored by, associated with or endorsed by WorldCom/MCI, Inc., any of its officers or affiliated companies.

© 2003 PRNewswire

©2003 Microsoft Corporation. All rights reserved.

[grania]

This is a grass roots effort. Stockholders are communicating online and expressing their dissatisfaction with the possibility of the whole company going to bondholders, the very group that didn't oversee how the money then lent WorldCom was spent.

[cake_crumb]

A boycott against MCI to keep them from filing bankruptcy and taking stockholders to the cleaners?? What does Danny Glover have to say about this? Which one of MCI's favoritist spokespersons' freedoms does THIS violate?

[cake_crumb]

"Any current, or possible future, WorldCom/MCI customer can help support the stockholders by sending an empty email message to: cancel.mci@nna.com"

Great idea! Email sent (I'm a FORMER MCI customer, but who knows....I might have changed my mind about their service at some unforseen future date)

[grania]

Great idea! Email sent (I'm a FORMER MCI customer, but who knows....I might have changed my mind about their service at some unforseen future date)

The Danny Glover thing is particularly hilarious. Sure, he supports the "little guy". Unless it isn't the little guy who's writing his check.

MCI called me a few weeks ago with what was really a good deal for phone services. I just thanked them for their time, but said I couldn't possibly go with a company that gave no financial benefit to the stockholders who believed in them through all of their scandals!

[cake_crumb]

"MCI called me a few weeks ago with what was really a good deal for phone services. I just thanked them for their time, but said I couldn't possibly go with a company that gave no financial benefit to the stockholders who believed in them through all of their scandals!"

Good for you! I had a similar call from them recently, along the lines of 'we want you back'. I summarized the reason I had cencelled their service the last time, and then mentioned a recent case where Hubby's aunt had cancelled hers for the exact same reason. I told them I had no reason to go back to them, since they were apparently still slamming their customers (MCI double billed both myself and Hubby's aunt)

After months of frustration and teleconferences, MCI blamed AT&T. I told AT&T about it. They said hey, wait a minute...this is not our fault. The AT&T rep offered to call the MCI rep, and we had a three way teleconference, which had a lot of arguing between the two reps and quickly degenerated into a hysterical spate of irrational accusations by the MCI rep...who hung up on both of us. I never managed a word edgewise, even when I thought to try to calm them both down. I wound up not having to pay the charges, but MCI is not worth the trouble.

Now they're screwing their stockholders....perhaps the stockholders can demend to appear in court to make their case during bankruptcy procedings?

[Tauzero]

"Stockholders are communicating online and expressing their dissatisfaction with the possibility of the whole company going to bondholders, the very group that didn't oversee how the money then lent WorldCom was spent."

If I own a business and you lend my business money, who is responsible for how that money is spent? You or me?

Or both?

[kimoajax]

Basically in Chapter 11 (reoganizaton), all shareholders (other than sinking fund preferreds) get zip, nada nothing unless credit and debt holders are made completely whole.

You are either fish or fowl in this process...and there is nothing in between. It is an instructive lesson for stockholders to go through and I am willing to take bets the so called grass roots action comes to nothing, zip, nada from a financial stanpoint to old shareholders. Any takers?

[kimoajax]

The degree to which debtors, ie, bondholders exercize oversight outside of the terms and convents found in their debt and loan documents themselves, they foolishly place their status as debt holders in jeopardy relative to other debt holders. This is why banks are loath to serve on boards of companies they have loaned money to.

[grania]

If I own a business and you lend my business money, who is responsible for how that money is spent? You or me? Or both?

Maybe there's some lawyer here who can help. My understanding of the stockholder complaint is that MCI could come out of bankruptcy with some of that debt still owed to bondholders; since MCI actually makes a profit some months and has contracted for quite a bit of new business, a reasonable amount of that debt could be paid off without the bondholders taking the whole company. Why not a 50-50 split? Pay of half of the debt with half-ownership of the company, let the stockholders own the other half, and the debt can be paid off month-by-month.

There's something a little shady here. The bondholders give the company billions of dollars in loans. The executives of MCI pocket incredible amounts of cash, so the debts aren't paid off. The executives get rich, and the bondholders get the corporation. Well, they wouldn't have wasted all of that money if the bondholders knew how their investment was being spent! This would be a win-win situation for everyone but the shareholders, you know, the little folk who are supposed to trust the market and investing.

[grania]

Any comments?

[bvw]

Yeah, I have a comment -- bonds should be outlawed, as long as we have a fiat money system.

[steve50]

Boycott sounds like a desperate, but wasted effort. Looks like the laws are written to protect the big dogs, if you're fool enough to play the big dogs game you'll find out sooner or later that you're the bone.

Oh well, at least Martha can give the press some video clips to keep the herd from wondering why Lay and the investment bankers walked. Buy stocks, it's patriotic.

[grania]

Oh well, at least Martha can give the press some video clips to keep the herd from wondering why Lay and the investment bankers walked

I'm not so sure. Last year I said the Martha thing would make the clueless take a good look at the stock market..."if Martha, that brilliant, stylish person can end up in trouble, who are we, dear?"

The people I know who actually buy the Martha Stewart stuff see the difference. Ken Lay and other CEO crooks destroyed pensions. Martha got in trouble for knowing too much about a stock.

MCI...it's a nice issue. The little guy doesn't get anything, even though the company is still there. It might be worth it, PR-wise, for government contracts and all, to give the stock some value. Otherwise, the protestors make their corporate lives a living hell whenever they're awarded a government contract.

[bert]

Well stated.

The nature of bonds is that they are senior to common stock. Stockholders lose their stake when the business fails.

Blackmail will be ineffective.

[bert]

...Looks like the laws are written to protect the big dogs.....

On any given day, you can invest your $50,000. There is a choice. Do you accept some risk for a reward or do you want the safety of fixed return. The stock holders decided on taking on the risk. Greed overcame security.

Granted there were other factors, but the rule holds. Stockholders loose in a failure. It as is must be.

[steve50]

Granted there were other factors, but the rule holds. Stockholders loose in a failure. It as is must be.

I agree those who bought the bubble should have known the risk involved. The problem lies in the outfits that cooked the numbers and assisted in hiding the debt offshore to distort the true nature of the balance sheets. I can't see this as anything other than a conspiracy to defraud. So far, these guys have suffered no personal liability, either civil or criminal.

I will be shocked if anything comes of it but a few sound bites leading into the 04 election process.

[bert]

. I can't see this as anything other than a conspiracy to defraud.....

American history is rife with swindles be they great or small. Bonds are specifically developed to reduce or eliminate capital risk, from market forces and swindles.

The problem at hand is the unwillingness to take personal responsibility for a bad decision. It is similar to the Gorons using lawyers to steal the Florida election. They don't like the outcome under existing law so they try to change it after the fact.

[steve50]

The problem at hand is the unwillingness to take personal responsibility for a bad decision.

I agree the rules were in place and the stock buyers should have done the homework to let them know the big dogs eat first.

The CEO's and investment bankers should also have known that there was risk involved in running a conspiracy to defraud, and should be willing to accept personal responsibility now that the scam is exposed.

[Southack]

"Basically in Chapter 11 (reoganizaton), all shareholders (other than sinking fund preferreds) get zip, nada nothing unless credit and debt holders are made completely whole. You are either fish or fowl in this process..."

You are correct, that's how things are historically done in bankruptcy court.

But the MCI scandal has the potential to change all that (then again, it may not realize such potential).

In the MCI case, you had legitimate MCI stockowners who found their company purchased through a fraudulent stock-exchange with a hyped up company called Worldcom run by a scam artist named Crowe.

On the stock exchanges, MCI was traded separately from Worldcom, but behind closed doors MCI's positive cash flow was being syphoned off by Worldcom/Crowe.

Any honest investor who did his/her homework on MCI by reading the 10K forms would have seen a cash-flow positive company with great name recognition.

The accounting books and federal forms, however, weren't accurate. The Worldcom pyramid of debt was unsustainable, to the extent that even the promised dividend payments to MCI shareholders were renegged on in a last ditch effort to shore up Worldcom.

Knowing all of that, multiple arguments can be made that MCI shareholders were defrauded of their legitimate equity and cash flow.

Normally, what the bankruptcy court does is to "exchange" the debt per share for future equity so that stockholders don't owe anything (and no longer have anything).

But I'm not convinced that the normal way of handling a bankruptcy will suffice for MCI.

In effect, what is currently being proposed is that bondholders were the real owners of Worldcom all along. The bondholders are now walking away with all of the stock, after all. Moreover, the old stockholders were essentially merely loaning money to Worldcom, as they have now lost all of their investments and have no equity to show for it.

That's upside down, especially since there was fraud involved.

Unlike stockholders (who can only review public documents), the bondholders had access to Worldcom's private books.

But the bondholders are now being treated better than the old stockholders, even though the bondholders were insiders during this scandal.

Moreover, the bondholders approved (certainly by default, and perhaps even overtly) MCI's President to say that the final MCI dividend would be paid (yet it wasn't paid).

At the very least, the old MCI stockholders of record at the time of the last promised dividend should be given what they are owed, as their debt should be just as valid, if not more so, than that of the bondholders. The bondholders had to approve all such payouts, after all, and that final payout was promised within mere weeks of the final default.

[Rodney King]

There seems to be a groundswell of anger at big money's use of the bankruptcy process to take assets from individual stockholders

The stockholders own the company. The stockholders elect the board of directors as their agents. The board of directors failed to do their job. The company, owned by the stockholders, issued debt with the promise to repay. It cannot now repay in full. Therefore, it must give everything that it has to the bondholders. That is the way it works. It could not be any other way. If the debtholders were unable to enforce their claims, then they would never issue debt. The entire world economy would come screeching to a halt, and we would be propelled into a global depression. That's the way it is.