WorldCom to emerge from collapse
PHILADELPHIA (Reuters) -- Telephone and data services company WorldCom Inc. said on Monday it aims to emerge from bankruptcy with $3.5 billion to $4.5 billion in debt under a plan giving its creditors control of the reorganized company.
WorldCom, which last year filed the world's largest bankruptcy case in the wake of an accounting scandal that may top $11 billion, also named Robert Blakely as its new chief financial officer. Blakely, 61, previously served as financial chief at Lyondell Chemical and the former Tenneco Inc.
WorldCom, the No. 2 U.S. long-distance telephone and data services company, said it would dump its tarnished name and adopt MCI, the brand of its residential long-distance telephone business, as its new moniker.
WorldCom, which in its heyday transmitted roughly half of the world's Internet traffic, buckled under $41 billion in debt and a growing accounting scandal when it filed for bankruptcy in July 2002.
Since then, WorldCom, Enron Corp. and Adelphia Communications Corp. have become synonyms for fraud and corporate malfeasance.
Creditors on board
Under the reorganization plan, holders of WorldCom bonds will get about 36 cents on the dollar for their $26 billion in notes. The MCI creditors, which owned $3 billion on bonds, will get 80 cents on the dollar, while Intermedia creditors will get about 94 cents on the dollar for roughly $1 billion in bonds.
Stockholders will get nothing.
The plan has the backing of roughly 90 percent of the company's creditors and remains subject to approval by the bankruptcy court, the company said.
WorldCom will also move its headquarters to Ashburn, Virginia, from Clinton, Mississippi. The move may help the company distance itself from its former management, led by Bernie Ebbers, the cowboy-boot wearing executive who built WorldCom through more than 60 acquisitions.
In addition, WorldCom will launch a global multi-media advertising campaign beginning on Monday on U.S. television and in the print and online media in the United States, Europe and the Asia-Pacific region.
"With established brand equity and a name that stands for integrity, innovation and value, we're ready to regain our leadership position in the marketplace,'' company Chairman and Chief Executive Officer Michael Capellas said in a statement.
Restructuring veteran becomes CFO
The appointment of Blakely as CFO is part of the clean sweep WorldCom has made of its top management and board of directors. Victoria Harker had been serving as WorldCom's acting CFO since January.
Blakely retired as CFO of Lyondell Chemical in June 2002, but he is most widely known for helping to restructure the former Tenneco Inc., which had businesses including energy, shipbuilding and packaging.
He helped transfer unwieldy conglomerate Tenneco, mired with a complicated debt structure and many unprofitable businesses, into a leaner company through spinoffs and asset sales.
WorldCom has said it aims to emerge from bankruptcy this summer with a new emphasis on small and mid-sized business customers and local telephone service. It will focus more on revenues and profit-margins rather than just grabbing market share at the expense of the bottom line.
WorldCom's sales have been trending downward each month since its Chapter 11 bankruptcy filing in July, putting it on track for an annualized revenue drop of about 26 percent.
Rivals such as AT&T Corp. and Sprint Corp. have claimed they are winning contracts and market share as corporate customers pare their business with WorldCom.
The entire long-distance industry, however, has been struggling with slack customer demand and increased competition from the Baby Bells and wireless telephone companies. WorldCom filed its reorganization plan with the U.S. bankruptcy court for the Southern District of New York.