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Strategies & Market Trends : Joe Copia's daytrades/investments and thoughts -- Ignore unavailable to you. Want to Upgrade?

To: Joe Copia who wrote (24737)	7/15/2002 8:14:14 AM
From: Joe Copia	Read Replies (1) \| Respond to of 25711

More ammo for a "structured BK" Sunday July 14, 5:04 pm Eastern Time New WorldCom financing plan underway By Peter Thal Larsen and Joshua Chaffin in New York Some of WorldCom's largest bondholders are working on a plan to provide the scandal-hit US telecommunications group with emergency financing as it prepares to file for bankruptcy. A number of distressed debt investors with large holdings in WorldCom bonds are understood to be working on a financing plan in an effort to improve their negotiating position against other creditors in the coming battle over WorldCom's assets. The financial package would most likely be provided as debtor-in-possession financing, which would accompany a bankruptcy filing. Although the details of the plan have yet to be finalised, several large bondholders are understood to have contacted the company to discuss the offer. John Sidgmore, WorldCom's chief executive, has indicated that the company may need as much as $3bn in new money to keep its operations afloat as it struggles to restructure its balanc e sheet, which is burdened with $32bn of debt. A WorldCom bankruptcy is regarded as inevitable after a group of its largest bank lenders on Friday filed a lawsuit against the company in an effort to improve their chances of recovering a $2.65bn unsecured credit facility. The lawsuit, which was filed on behalf of 25 banks including Deutsche Bank and ABN Amro, comes after the banks failed to persuade WorldCom to pledge some of its assets as security for the $2.65bn in return for an injection of new capital. The lawsuit represents a last-ditch effort by the banks to ensure that their claims against the company are settled before those of holders of WorldCom's bonds, which have a face valu e of about $29bn but trade at about 15 cents on the dollar. If the banks fail, they are likely to be forced to write off almost all of their loans. On Friday a New York State Supreme Court judge rejected the banks' demands for WorldCom's assets to be frozen immediately. A hearing has been scheduled for Tuesday to assess the merit s of the banks' case, which alleges that WorldCom obtained the funds fraudulently. The company drew down the credit facility in May, just six weeks before it shocked investors by unveiling details of a $3.9bn accounting fraud. Last week, an informal group of WorldCom bondholders wrote to the company warning it not to pledge any of its assets as security for the $2.65bn loan. In the letter, the bondholders suggested they could provide new financing on better terms than the banks.