Bondholders Are Considering A Proposal
Friday July 5, 7:45 am Eastern Time
Reuters Business Report
WSJ: WorldCom Bondholders Eye Swap
NEW YORK (Reuters) - WorldCom Inc.'s (NasdaqNM:WCOME - News) bondholders are considering a proposal to swap their debt for equity in a prearranged Chapter 11 bankruptcy protection filing, The Wall Street Journal said in a report on Friday.
In its online edition Friday the Journal said the proposed debt-for-equity swap raised the stakes in the struggle between the beleaguered telecommunications company, its bankers and other creditors, to whom it owes a total of $32.8 billion.
The holders of $26 billion in bonds were by far the largest creditors and would have greater influence over developments with WorldCom in Chapter 11 than they would outside Chapter 11, it said.
The plan assumes that in the absence of the crushing debt load, WorldCom's fundamental business is essentially sound and that bondholders will ultimately have a better chance of recovering their money via a quick trip through the bankruptcy court, the report added.
On Tuesday WorldCom, caught in a $3.85 billion accounting scandal, said it aimed at developing various funding proposals with its lenders to stave off a possible bankruptcy.
INTERNAL PROBE CUT SHORT
In a separate report, the Journal said the Justice Department had curtailed WorldCom's internal probe into accounting irregularities to make way for the government's own inquiry at the company.
"Justice wants to go first. They want to get to people and get their version of events," one source told the Journal.
Officials at the department in Washington and WorldCom in Clinton, Mississippi, were not immediately available for comment on the reports. |
