To: Mr. Pink who wrote (3400 ) 10/5/2000 7:40:50 PM From: StockDung Respond to of 4155 WorldCom's CEO to sell stock to cover margin call NEW YORK, (Reuters) - In the latest disappointment for brash deal-maker Bernie Ebbers, the WorldCom Inc. chief executive has been forced to sell about 11 percent of his stake in the telephone and data company to cover a margin call caused by the decline in the company's stock price. Ebbers, like other corporate executives such as Track Data Corp. Chief Executive Baruch Israel Hertz, faced a margin call that required him to raise funds to back stock bought with borrowed funds. Buying under margin allows investors to borrow funds from a brokerage firm to buy stock. An investor must maintain a certain level of cash or securities in an account to cover the margin transactions. When the value of margined securities falls below the required levels, a ``margin call'' requires an investor to put up additional cash or securities. Ebber's margin call came as shares of WorldCom have fallen about 51 percent this year. Clinton, Miss.-based WorldCom said Thursday Ebbers planned to sell 3 million shares of the telephone and data company's stock, or about 11 percent of his stake, to raise money that would cover WorldCom shares bought on margin. Ebbers filed with the Securities and Exchange Commission on Sept. 28 to sell the stock, which was worth about $78.2 million. Ebbers owned about 27 million shares of WorldCom stock at the time of the filing, the company said. The filing cited Sept. 28 as the approximate date of sale, but the company could not confirm whether the sale had taken place. WorldCom spokeswoman Claire Hassett said Ebbers had bought WorldCom shares on margin, but she declined to provide additional information. The SEC filing indicated that Ebbers bought the 3 million shares on the open market in 1996. Shares of WorldCom closed at $25-15/16, down $2-1/4, or nearly 8 percent, in heavy trading on Nasdaq. Traders cited Ebbers' stock sale as a reason for the weakness. WorldCom, like other telecommunications stocks, has been hit by investors' concerns about increasing competition and price wars in the long-distance telephone market, and the high cost of building high-speed data and wireless networks. The collapse of WorldCom's merger with Sprint Corp. further spooked telecom investors and marked the first failed merger attempt by Ebbers, who has acquired more than 60 companies in the past decade. In the wake of the failed Sprint deal, WorldCom has been struggling with competition and price pressure in the stagnant consumer and wholesale telephone businesses. WorldCom in July cut its sales growth forecasts for the second half of the year. WorldCom currently is mulling the creation of separate companies or tracking stocks for its consumer and wholesale businesses. The company may jettison the slow-growing units so it can concentrate on its fast-growing data, Internet and international operations. The SEC filing indicated that the shares Ebbers planned to sell were subject to a secured forward sale contract. Such a pact allows Ebbers to get money for the value of the stock but deliver the shares at later time. The most recent high-profile margin call was against Hertz, head of the stock-trading firm Track Data. Hertz owed $45 million to various brokerage firms because of margin calls. 19:00 10-05-00