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Court waves through Worldcom bankruptcy plan
And with one bound MCI was free
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 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 in 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. He said that MCI would name three more directors in three week's time, 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 $9 billion accounting scandal. Capellas, formerly of Compaq, was made CEO following the company's bankruptcy and the appointment was 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 $107 billion in assets and a stunning $41 billion in debts, making the bankruptcy the largest in history.
Though MCI will have just $5.8 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 $24.5 billion and net income of $500 million this year, reaching $25 billion and $D1.2 billion respectively in 2005.
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