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

To: Charles Tutt who wrote (11369)	7/22/2002 5:20:48 AM
From: StormRider	Respond to of 11568

WorldCom Files Largest Chapter 11 Bankruptcy Case By Jeff St.Onge New York, July 21 (Bloomberg) -- WorldCom Inc., crippled by dwindling cash reserves and accusations of accounting fraud, filed the largest bankruptcy in U.S. history to seek protection from creditors it says are owed $41 billion. The filing in U.S. Bankruptcy Court in Manhattan lists $107 billion in assets and $41 billion in liabilities, including $24 billion in bond debt. Founded in 1983 in a Mississippi diner, WorldCom grew through more than 75 acquisitions to become the nation's second-biggest telecommunications company. It handled more than half of the world's Internet traffic, employed 85,000 people and boasted a growth rate that sent its share price soaring. The Chapter 11 reorganization filing comes less than a month after the telecommunications provider revealed it hid $3.85 billion in costs over five quarters to boost profits. Still, bankruptcy may help salvage the company. ``WorldCom is better off in bankruptcy,'' said Gary Hindes of Deltec Asset Management Corp. ``They're burning though cash like crazy. Bankruptcy allows them to reorganize, de-leverage their balance sheet and come out with a clean slate.'' Plummeting Fortunes WorldCom's fortunes have plummeted since 1999, when it was gobbling up rivals and challenging the long-distance dominance of AT&T Corp. Declining sales and growing debt squeezed the industry and wiped out more than $100 billion in the company's market value. ``They look like a going concern even after you adjust for the $3.85 billion,'' said Edward Altman, a professor at New York University's Stern School of Business. ``Once the accounting issues hit the market they likely lost business customers and vendors asked to be paid on time, creating a chain reaction.'' WorldCom's shares, which already had fallen, have plunged more than 90 percent since June 25 when WorldCom disclosed the accounting irregularities. They traded as high as $62 in 1999 and sold for 9 cents on Friday, and the bankruptcy is likely to make them worthless. WorldCom bonds trade at pennies on the dollar. Based in Clinton, Mississippi, the company has more than 20 million customers. Co-founded by Bernard Ebbers, WorldCom borrowed in excess of $30 billion to fund more than 75 of acquisitions at the height of the 1990s technology boom. Maintaining Service The biggest purchase netted long-distance unit MCI Communications Corp. for $47 billion in 1998. WorldCom's sales peaked at $35.9 billion in 1999 and fell to $35.2 billion in 2001 sales. Federal Communications Commission Chairman Michael Powell said last week he didn't think service would be disrupted for WorldCom's customers. By law, a telecommunications carrier must notify the FCC and file for regulatory permission to begin shutting down service to voice or data customers. Federal law then prohibits the company from ending service for at least 31 days, a period Powell says he will extend if necessary to protect consumers. The filing adds to what already was a record pace for U.S. corporate bankruptcies this year. Even before WorldCom, 131 public companies with about $150 billion in assets had filed, according to BankruptcyData.Com. Last year, 255 publicly traded companies put $260 billion of assets under court protection, almost triple the record that had stood for a decade. That figure includes Enron Corp.'s then-record $63.4 billion bankruptcy in December. Telecommunications Collapse Global Crossing Ltd., the fiber-optic network owner that filed for bankruptcy in January, is among the victims of the collapse in telecommunications. Dozens of companies in the industry have filed in the past two years, including At Home Corp., Winstar Communications Inc. and PSINet Inc. Banks cut off credit to WorldCom after the Securities and Exchange Commission filed fraud charges, and the company's financial restatement triggered a $2.65 billion loan default. The company is also under investigation by criminal prosecutors at the Justice Department and at least two congressional committees. WorldCom is conducting an internal accounting probe back to 1999 that lawmakers say may reveal another $1 billion in misreported costs. Ebbers resigned as chairman in April, owing WorldCom more than $408 million for loans he has agreed to repay. John Sidgmore, vice chairman of WorldCom since 1996, took over as chief executive officer and WorldCom replaced auditor Arthur Andersen LLP. Chief Financial Officer Scott Sullivan was fired. WorldCom arranged a $2 billion bankruptcy credit line to help fund operations during reorganization, people familiar with the situation have said. J.P. Morgan Chase & Co., Citigroup Inc. and General Electric Co.'s GE Capital unit have agreed to provide the financing, which must be approved by a bankruptcy judge. With more than $5 billion in bond and bank debt due next year, the company is firing 17,000 workers and has said it will sell wireless assets and operations in Latin America and Japan to raise cash. WorldCom missed a $79 million payment on Monday and has said it would save $71 million by not paying a scheduled stock dividend.

To: Charles Tutt who wrote (11369)	7/22/2002 8:12:43 AM
From: James Calladine	Respond to of 11568

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