BUSINESS
MCI to emerge from bankruptcy next year
03-11-2003
by
US telecoms company WorldCom has won court approval for its reorganisation plan and should emerge from bankruptcy in early 2004.
The company, which will officially change its name to MCI after the reorganisation is complete, said that with the plan approved it would be able to turn its attention to driving up revenues and widening its thin profit margins.
"This is a great day for MCI. Against all odds, we have reached our confirmation faster than anyone expected," said Michael D. Capellas, MCI chairman and CEO, in a statement. "Today's (Friday's) ruling is a real tribute to our 55,000 hardworking employees and our loyal customer base of 20 million strong."
Though experts presumed that the company would eventually come out of bankruptcy, it was thought by many that the process would take far longer. While most large bankruptcies drag on for years, MCI won approval over just 15 months after filing for Chapter 11 protection.
"We have spent the past 10 months building a world-class board of directors, recruiting seven new key executives, including a CFO, a COO, a general counsel and a chief ethics officer, and instituting a standard-setting corporate governance structure," Capellas added. The company's CEO said that in three week's time, MCI would name three more directors bringing the total to 12 -- Capellas and 11 independent outsiders.
Several of the company's former executives were investigated following a major accounting scandal that broke in mid-2002 and the company's former CEO, Bernie Ebbers, still faces criminal charges for allegedly coordinating the USD9 billion accounting scandal. Capellas himself, formerly of Compaq, was made CEO following the company's bankruptcy and the appointment was largely seen as an attempt to restore confidence and trust to the company.
Once completed, the firm's reorganisation will largely wipe out the holdings of current MCI shareholders and will see the firm issue new stock and notes to current bondholders and other creditors. Other portions of the complex plan will see the firm repay billions of dollars in claims against it. When the company filed for bankruptcy protection, it reported USD107 billion in assets and a stunning USD41 billion in debts, making the bankruptcy the largest in history.
Though MCI will have just USD5.8 billion in long-term debt when it emerges from Chapter 11, industry watchers say that this could be an acquisition target as it begins a slow mark toward wider profit margins. In court filings, the company projected revenue of USD24.5 billion and net income of USD500 million this year, reaching USD25 billion and USD1.2 billion respectively in 2005.
In Ireland, where the company employs more than 100 people in offices in Dublin, Cork, Galway and Limerick, MCI counts Aer Lingus, An Post and Fyffes among its customers.
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