Disgraced US data and telecommunications company WorldCom has filed a plan of reorganisation to emerge from Chapter 11 bankruptcy in which it has been languishing since last year.
The company said it hoped to emerge with US$3.5bn to US$4.5m in debt as part of a plan to give creditors control of the reconstituted company.
WorldCom, which in July of 2002 filed the world’s biggest ever bankruptcy case, will also be changing its name to MCI in an effort to dissociate itself from the accounting scandal that involved more than US$11bn and which led to its collapse. Holding assets of US$107bn, its bankruptcy dwarfed the possibly more notorious Enron’s US$64bn filing in the same year.
MCI is the name of its residential long distance telephone business.
Chairman and CEO Michael Capellas, who took over the reins of the company post scandal, said: “Our company has demonstrated a new fast and focused attitude and a commitment to emerge from Chapter 11 later this year as a leaner, stronger competitor.”
WorldCom will also be moving its base from Mississippi to Virginia to further distance itself from its former management and will today launch a global multimedia advertising campaign on US television and in print and online throughout the US, Europe and Asia-Pacific.
Prior to the fall, it had been the second biggest US long-distance telephone and data services company.
Its new chief financial officer (CFO) has been named as Robert Blakeley. His predecessor, Scott Sullivan, is still awaiting trial for fraud.
Under the reorganisation plan creditors will get around 36 cents on the dollar for their US$26bn in notes.
MCI creditors, which had US$3bn on bonds will get 80c in the dollar, while Intermedia creditors will get 94 cents in the dollar for around US$1bn in bonds.
The reorganisation plan is said to have the support of 90pc of the company’s creditors but is still subject to approval by the bankruptcy court.
Following last year’s scandal Capellas and his team announced in January 2003 a 100-Day Plan, the conclusion of which was today’s filing.
The company’s website states: “During the 100 days, the company implemented a number of new corporate governance measures. The company restructured its board of directors and installed a new leadership team. It has an active ethics office that, among other things, is implementing ethics and financial reporting training and enforcing a new code of ethics and business conduct.”
By Suzanne Byrne