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Strategies & Market Trends : Groundhog Day -- Ignore unavailable to you. Want to Upgrade?

To: Jorj X Mckie who wrote (2071)	4/23/2002 12:43:55 PM
From: John Pitera	Read Replies (2) \| Respond to of 6346

Tom, WCOM looks like it will have a reorganization. I'd say that WCOM will see something similar occur to what has just happened at Williams Communications. The company has too much debt so the bond holders end up owning the company. So the equity holders are squeezed out of the ownership profile. Where your saavy vulture capitalists create value is when they buy the distressed bonds for less than that underlying equity ownership will be worth in a few years. since that's not an obvious number, there is the risk. ------------ After weeks of trying to rework nearly $6 billion in debt, Williams Communications Group Inc. filed for Chapter 11 bankruptcy-court protection Monday night after striking a deal to distribute all its equity to its bondholders and former parent company Williams Cos. The filing is yet another sign of the excesses of the '90s telecommunications boom and the severity of the current bust. Williams Communications' bankruptcy-court filing follows a Chapter 11 filing by Global Crossing Ltd., which had more than $12 billion in debt and disappointing results from a number of telephone and telecommunications companies. In particular, it is a blow to Williams Cos., long a major energy company in Tulsa, Okla., which made a fortune in the 1980s by running fiber through old natural-gas pipelines to build a new telecommunications network. That unit was sold, but once a noncompete agreement expired, Williams jumped back in with Williams Communications and expanded quickly. Last year, it spun off the company to shareholders in a move that now will be sharply questioned. online.wsj.com