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MCI EMERGES FROM BANKRUPTCY TODAY

˝ [The Wall Street Journal, B5.] MCI, the nationÝs No. 2 long-distance phone company, is set to emerge from Chapter 11 federal bankruptcy-court protection today, issuing new stock and bonds to pay off creditors.  The company also will make a record $750 million payment that eventually will go to investors who were crushed by the companyÝs $11 billion accounting fraud and subsequent record-setting bankruptcy filing.  MCI, which changed its name from WorldCom and moved its headquarters to Ashburn, Va., from Mississippi during the bankruptcy, will fully rejoin a beleaguered telecom industry in which overcapacity has been driving prices down at a merciless rate.  The company will pay the Securities and Exchange Commission $500 million in cash and $250 million in newly issued stock as part of its settlement today, though the proceeds likely won’t be distributed to investors for more than a year as the court overseeing the settlement sets up a procedure for filing claims.  Some analysts fear MCI will become the ultimate ýzombieţ company—one that has been artificially revived by bankruptcy and is helping to keep an already-overcrowded industry flooded with supply.  MCI says it has done everything in its power to clean house after the fraud, which resulted in criminal charges against former CEO Bernard Ebbers, former Chief Financial Officer Scott Sullivan and four other former executives.  The debacle wiped out a stock that had been valued at about $180 billion at its peak in 1999 and spawned numerous shareholder lawsuits.  Those lawsuits were wiped out by the bankruptcy filing, though suits against individuals involved with the company are continuing. 


Posted by SPN on 04/21 at 08:13 AM in Blogging

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