The beleaguered state of the once high-flying telecommunications industry reached an all time low Sunday when WorldCom Inc. filed the largest bankruptcy petition in U.S. history.
WorldCom CEO John Sidgmore told reporters today during a press conference that he expects the bankruptcy process to extend at least through the first quarter of 2003.
Listing $107 billion in assets in the voluminous bankruptcy filing, the telecom titan operates in more than 200 countries on six continents and serves a customer base that includes Fortune 500 companies, the U.S. government and the world’s largest communications companies such as rival AT&T Corp.
WorldCom, which has an estimated $32.8 billion in debt ($28 million of which is bondholder debt), said it has secured an agreement to arrange up to $2 billion in debtor-in-possession financing. The financing is subject to bankruptcy court approval.
Sidgmore said the bankruptcy filing would not impact negatively the company’s customers and suppliers. Furthermore, the company’s international operations are not included in the bankruptcy filing, he said. “We think we can serve all of these groups in the normal matter and the normal course.”
Overloaded with more than $30 billion in debt this year, Clinton, Miss.-based WorldCom already faced a dramatic slide in investor confidence as the communications industry imploded.
Replacing former CEO Bernie Ebbers with Sidgmore, WorldCom aimed to turn the embattled company around. Sidgmore vowed to restructure the company by, in part, shedding non-core assets such as the resale wireless unit.
A bankruptcy filing clearly was not the preferred option. However, WorldCom severely limited its options last month after the company disclosed recording nearly a $4 billion accounting blunder during the past five quarters that allowed the No. 2 long distance carrier to inflate profits and elude losses.
“I regret that we are in the position we are in today,” Sidgmore said. “We fought hard and frantically to avoid this, but ultimately the board of directors decided that taking this action was the very best way to helping the greatest number of people … and frankly it became the only way to provide for our company’s future.”
