Waldy, its not over until its over... Yogi Berra.
By Jonathan Krim and Christopher Stern
The Washington Post
STEFAN ZAKLIN / GETTY IMAGES
WorldCom CEO John Sidgmore: “We want the bad guys exposed and the bad guys punished.”
WorldCom Chief Executive Officer John Sidgmore went on the offensive to save his besieged company yesterday, apologizing for its $3.8 billion accounting scandal, meeting with top federal regulators and declaring, "America has a major stake in our survival."
Sidgmore, who took over as CEO two months ago, said WorldCom is "a key component of our nation's economy and communications infrastructure. Both commercial and national security interests rely upon WorldCom's operations continuing without disruption."
And he committed the company to fully cooperating with numerous ongoing investigations no matter where they lead at the provider of long-distance telephone and Internet-transmission services.
"We want the bad guys exposed and the bad guys punished," he said at a news conference in Washington. "... I want to apologize on behalf of everyone at WorldCom."
Although he would not rule out bankruptcy, Sidgmore said he is negotiating with banks to restructure the company's debt and to seek an additional $1 billion in loans. He said the company expects to have two bank proposals by the weekend.
The company has about $2 billion in the bank, and Sidgmore pledged that its existing services, including its Internet "backbone" that handles roughly half the Internet's traffic, remain operational and secure.
Answering questions in calm, matter-of-fact tones, Sidgmore said that if the company's debt is not restructured, it would face problems meeting a $2 billion interest payment due early next year. Underlying Sidgmore's activities was a clear campaign that WorldCom should not be allowed to fail.
But the company faces enormous hurdles. The 50 banks that own its debt can demand immediate repayment, which would immediately force the company into bankruptcy.
"It's going to be very challenging, if not impossible, for them to come back," said Charles Ullerich, who manages junk bonds at ABN Amro Asset Management and has been selling WorldCom bonds in recent months. "Sidgmore can say anything he wants, and even if he walked on water, it would be difficult for people to invest in his story."
WorldCom already was negotiating an extension on $5 billion in loans before it announced it had inflated its earnings. Meanwhile, other companies have begun to circle, looking to pick up its assets at bargain prices.
Last night, IDT, a New Jersey company that has acquired distressed telecommunications companies, said it would offer $5 billion for MCI's residential long-distance business and its small-business unit, plus MFS, a former upstart local telephone company that WorldCom purchased in 1996 for $14 billion.
WorldCom spokesman Brad Burns said, "It would be highly unlikely that we would sell off our core assets such as MCI or our local business."
IDT CEO Howard Jonas accused Sidgmore of ignoring his proposal, saying Sidgmore is trying to use scare tactics to persuade the government to pressure the banks into extending further credit.
Sidgmore said he did not know whether WorldCom's founder and former CEO, Bernard Ebbers, had any prior knowledge of the $4 billion hole in the company's books.
"We don't know whether he was involved, and we don't know whether he wasn't involved, and that's the truth," he said.
As for Scott Sullivan, the chief financial officer fired last week, Sidgmore referred to his role in addressing why the accounting lapses weren't detected earlier. He called WorldCom "a far-flung operation."
"No single operating unit knows what's going on in the rest of the organization, and it all came together at Scott Sullivan's level, to be honest with you," Sidgmore said.
Information from Bloomberg News and The Associated Press is included in this report. |
