Williams Communications Seeks Chapter 11 Protection (Update1)
By Tom Giles and Vivien Lou Chen
quote.bloomberg.com
New York, April 23 (Bloomberg) -- Williams Communications Group, which amassed more than $7 billion in debt building a fiber- optic network, agreed to file for Chapter 11 bankruptcy protection from creditors.
Tulsa, Oklahoma-based Williams Communications will convert its debt into equity in a reorganized company to be owned by bank lenders and bondholders, spokeswoman Deb Trevino said. Under the proposal, filed in the U.S. Bankruptcy Court in Manhattan, shareholders will be wiped out.
Williams Communications is the latest telecommunications company to seek bankruptcy protection after borrowing billions to build a network that failed to generate enough revenue to repay the debt. Last week, Flag Telecom Holdings Ltd. filed for protection from creditors owed $2.59 billion, joining rivals Global Crossing Ltd. and 360networks Inc. in Chapter 11.
``If the job of management and the board of directors is to protect shareholder value, they've done a pretty poor job,'' said Neal Nelson, a computer consultant who formed a committee of mainly individual shareholders in Williams Communications. Nelson, who's based in the Chicago area, estimates the group holds more than 10 percent of the company's stock.
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