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Technology Stocks : WCOM -- Ignore unavailable to you. Want to Upgrade?

To: JDN who wrote (11225)	7/9/2002 10:33:28 PM
From: calgal	Read Replies (2) \| Respond to of 11568

WorldCom Considering Reorganization Tue Jul 9, 7:14 PM ET By JOHN PORRETTO, AP Business Writer JACKSON, Miss. (AP) - WorldCom Inc. says it will know within three weeks whether it will pursue what would be the largest corporate bankruptcy filing in U.S. history. The Clinton-based long-distance and data services company is on the verge of bankruptcy after disclosing it disguised $3.9 billion of expenses as capital expenditures in a bid to appear more profitable. WorldCom executives clashed with former auditors Arthur Andersen LLP Monday during Congressional hearings over who's to blame for the improprieties, which prompted President Bush ( news - web sites) to propose tougher penalties for company officials who lie on financial statements. As the WorldCom case unfolds, the company continues to negotiate with lenders for $5 billion in critical funding — as it was doing before news of the accounting scandal broke June 25. The company said Tuesday it also was awaiting word from banks on interim financing that could avert a bankruptcy filing — at least for now. Another option is a debt-for-equity swap with bondholders as part of a prepackaged Chapter 11 filing. A company spokeswoman said chief executive John Sidgmore has been contacted by certain bondholders, but no formal discussions have started. "We're fighting for our life," Sidgmore testified Monday before a House panel investigating the debacle, which is under investigation by the Securities and Exchange Commission ( news - web sites) and the Justice Department ( news - web sites). WorldCom has laid off 17,000 of its 80,000 workers, and Sidgmore has said additional layoffs are possible. The company, which has $30 billion in debt, also is looking to sell parts of the business to raise cash. Telecom analyst Pat Comack of Guzman & Co. in Miami said WorldCom's next move — bankruptcy or not — places bondholders and lenders in a tenuous situation. Comack said any new bank loans almost certainly would be secured with collateral, placing those lenders at the top of the creditor's list should a bankruptcy filing eventually occur. On the other hand, he said, a debt-for-equity arrangement would give bondholders — who hold $26 billion in bonds — greater leverage and a better chance of recovering their investment. Without debt, Comack said, a leaner WorldCom could emerge from bankruptcy and possibly survive on its own or become a takeover target. With more than $100 billion in assets reported at the end of March, a WorldCom bankruptcy would be twice as large as Enron's slide into Chapter 11 last fall and four times as big as Global Crossing's in January. The company's shares have plunged from more than $64 in June 1999 to 21 cents Monday. story.news.yahoo.com