Could this be the impetus we need to create mass panic and get everyone out who wants out? T minus 13.5 hours and counting......
WorldCom Says to File Bankruptcy Sunday
PHILADELPHIA, July 21 (Reuters) - WorldCom Inc. said it will file Chapter 11 bankruptcy protection later Sunday in the nation's largest insolvency after the long-distance telephone and data services company buckled under a $3.85 billion accounting scandal and a mountain of "junk-rated" debt.
"Because we're going to restructure our balance sheet and reduce our debt, we think we can emerge from the Chapter 11 process a stronger and healthier company," WorldCom Chief Executive John Sidgmore said in a telephone interview.
WorldCom, which has 85,000 employees and operations in 65 countries, aims to emerge from Chapter 11 in about 9 to 12 months. The company expects to hire a restructuring expert within the next two weeks to aid the current management team.
The Chapter 11 filing by WorldCom would follow once high-flying companies like energy trader Enron Corp. and Global Crossing Ltd., which crumbled into bankruptcy amid a crush of accounting investigations by federal regulators.
WorldCom last month disclosed it improperly accounted for $3.85 billion in expenses and fired its former chief financial officer, Scott Sullivan, who it alleged orchestrated the accounting debacle.
Its former chief executive, Bernie Ebbers, resigned under pressure in April. WorldCom was charged with fraud by the U.S. Securities and Exchange Commission and faces lawsuits from several state pension funds, which alleged WorldCom provided misleading information during a 2001 bond offering.
WorldCom expects to get so-called debtor-in-possession funding that would allow it to keep operating under a bankruptcy reorganization. The bankruptcy would not include the company's international operations, Sidgmore said.
"We'll have financing that will be up to $2 billion. We'll be funded immediately, assuming the court approves it tomorrow morning, to the tune of about $750 million. We think that will last us at least a year and we'll emerge from bankruptcy without any other additional requirements," Sidgmore said.
"I think it's fair to say that we will use some of the DIP financing early on, but we will leave the lion's share of it untapped," he said.
The bankruptcy status also eliminates about $2 billion a year in interest payments WorldCom owed on its more than $30 billion in debt, Sidgmore said.
Shares of WorldCom closed Friday at 9 cents on Nasdaq. The company's once high-flying stock, which rocketed to $64 in 1999, had made it one of the darlings of the Wall Street bull market. Its swift drop epitomized the bombed-out telecom industry that crumbled under a glut of capacity, excess debt and accounting scandals.
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