I wouldn't swear to it, but I think in Florida, a person can keep the whole house. It falls under the "homestead exemption".
In the mean time, WCOME is dealt another blow....
FAA Rejects Key WorldCom Bid for Telecom Network
July 16, 2002 12:22 AM
Dow Jones Newswires
WASHINGTON -- The Federal Aviation Administration rejected WorldCom Inc.'s (WCOME) bid to build a $3.5 billion next-generation telecommunications network, dealing the troubled company a blow that could dash its hopes of recovery.
Instead, it awarded the contract to Harris Corp. (HRS) of Melbourne, Fla., for a contract that could last up to 15 years. The initial term of the contract is for five years at $1.7 billion.
The FAA's rejection of WorldCom came despite pleas by Federal Communications Commission Chairman Michael Powell for federal agencies not to cut their ties to WorldCom, which is reeling in the face of a $3.9 billion accounting scandal. As customers flee the company, the federal government has become an even more critical customer.
WorldCom did $462 million in business with the federal government last year, which included telecommunications services for the FAA. However, given WorldCom's problems, those agencies will be reviewing those contracts when it comes time for renewal.
The new FAA contract would have been anything but routine. The FAA is attempting to redesign its telecommunications system from the ground up, integrating disparate systems into a unified, highly secure network.
WorldCom's loss is a gain for the nation's other major telecommunications players. Harris's team included Raytheon Co. (RTN), Sprint Corp. (FON), and the four Baby Bell telephone companies, BellSouth Corp. (BLS), Verizon Communications Inc. (VZ), SBC Communications Inc. (SBC) and Qwest Communications International Inc. (Q).
But the FAA also rejected a bid by Lockheed Martin Corp. (LMT), which planned to use AT&T Corp. (T) as its subcontractor.
Under the so-called FAA Telecommunications Infrastructure contract, or FTI, Harris will modernize and operate a wide range of voice, data and video telecommunications services in the air traffic control system used by air traffic controllers to communicate with each other and with pilots. Harris will phase out older systems and replace them with a unified system.
"FTI is a critical element of our overall plan to modernize the national airspace system," FAA Administrator Jane F. Garvey said.
"We are very pleased that the FAA has chosen our team for the FTI program," said Phillip W. Farmer, chairman and chief executive of Harris.
Sprint vice president Tony D'Agata said that while it's possible that WorldCom's problems were a factor in the FAA's decision, the agency "saw value" in the Harris team. "It's a very strong team."
Sprint, which will be providing long-haul data services, expects to reap about 20% of the bid's value.
Telecommunications analyst Scott Cleland of Washington's Precursor Group said the FAA's decision wasn't unexpected. It would have been difficult for the agency to justify awarding a critical long-term contract to a company whose very future is in doubt.
But it's "also unlikely WorldCom will lose any existing (government) business," Mr. Cleland added.
A WorldCom spokeswoman said the FAA's decision "certainly is not a reflection on WorldCom's ability to provide state-of-the-art solutions to our customers. Our long-standing relationship of 13 years and numerous awards from the FAA for the quality of our service shows we have the expertise and the technical capabilities to meet the FAA's requirements."
Trustee Says WorldCom Didn't Make Interest Payments
Separately, WorldCom didn't make a total of about $74 million in interest payments due Monday on two bond issues, an official for JP Morgan, who is the trustee on the issues, said Monday.
The company had about $36.9 million each in interest due on its 7 3/8% notes due Jan. 15, 2003 and the 7 3/8% notes due Jan. 15, 2006.
Unit Intermedia has about $5.3 million due on its 8 1/2% notes due Jan. 15, 2008.
A company has a 30-day grace period after missing a payment to make good on it or be found in default.
The interest payment on Intermedia's 8 1/2% bonds due 2008 wasn't made as of 4:30 p.m. EDT, said a spokesman at WL Ross & Co. LLC, New York, a firm that holds some WorldCom debt.
Officials for WorldCom weren't immediately available for comment.
Many market observers had expected the company to miss the payments as it faces possibly the largest Chapter 11 filing in U.S. history. WorldCom values its assets at $104 billion, a figure that is double that of Enron Corp. (ENRNQ) and its related entities.
"It was mostly expected by the market," said one distressed debt analyst, who wished not to be named. "The bonds have been trading flat, or with no accrued interest, which means the market convention has been assuming since the fraud was announced ... that the payment would not be made."
The 7 3/8% notes due 2003 and 7 3/8% notes due 2006 were both trading in the mid-teens while the Intermedia 8 1/2% notes due 2008 were trading at about 25 1/2 bid, the analyst said.
Another clue came last week when the company announced that it wouldn't pay the 60 cent-a-share dividend of MCI Group (MCITE) common stock that was scheduled to be paid Monday because of its current situation.
The next event in the process will come Tuesday when New York Supreme Court Judge Helen Freedman is scheduled to hold a hearing on an unusual request that would bar WorldCom from spending what remains of a $2.65 billion loan it drew down in May. On Friday, Judge Freedman denied a request, made by 25 lenders participating in the loan, for a temporary restraining order freezing the cash.
The move was a bold effort by the banks to reclaim what now appears to be the only source of money remaining to WorldCom, beyond any debtor-in-possession financing it would receive as part of a bankruptcy filing.
Banks and bondholders, the largest class of creditors with about $30 billion in bonds, were both reportedly considering providing such financing to WorldCom, in an effort to stake out a first-in-line position in the event of a bankruptcy.
The Wall Street Journal reported that Citigroup Inc. (C), J.P. Morgan Chase & Co. (JPM) and General Electric Co.'s (GE) financial-services arm GE Capital would likely provide WorldCom financing in a bankruptcy proceeding. Meanwhile, some of WorldCom's largest bondholders are working on a similar proposal, according to the Financial Times.
Last month, WorldCom announced that it had improperly accounted for $3.9 billion in routine expenses as capital spending over the past five quarters -- thereby making the company look more profitable than it actually was. As a result, Chief Financial Officer Scott Sullivan was fired. He and former chief executive Bernie Ebbers last week refused to testify before a Congressional committee holding hearings on the matter.
-- Mark Wigfield, Nicole Bullock, Michael C. Barr and Johnathan Burns of Dow Jones Newswires contributed to this article.
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