NEW YORK, July 22: Telecom giant WorldCom filed for bankruptcy protection to become the largest US business failure after shenanigans for which CEO John Sidgmore said the company is “very sorry.”
“This corporation is very, very sorry for what happened here,” Sidgmore told NBC’s “Today” show early Monday, a day after the filing.
WorldCom executives scrambled over the weekend to cover overwhelming debt, Sidgmore said.
“Our fundamental problem was that we had $30 billion in debt,” Sidgmore said.
“We had been frantically working to get financing to cover that and to recapitalize the company over the last several months,” he said. However, things unravelled over the weekend.
“The banks and other institutions that were covering us ran away,” he said.
The Clinton, Mississippi-based company filed late Sunday for protection under Chapter 11 of the US bankruptcy code, which allows it to continue operating while it works out a plan to pay its debts.
The failure is twice as large as the record-breaking bankruptcy filed by Enron in December. In the bankruptcy petition, WorldCom listed assets of $107 billion as of March 31, against liabilities of $41 billion.
By comparison, Enron listed $63.4 billion in assets when it sought bankruptcy protection, sinking in a morass of accounting scandals.
Sidgmore said it was unlikely that a bankruptcy judge would sell off WorldCom in pieces.
“A judge can do whatever it wants, but in this particular case, it’s really highly unlikely.
“The reason is that the value in WorldCom is not in the individual assets. It’s in the enterprise.
“We have 20 million customers,” he told NBC.
WorldCom, the second-largest US long-distance telephone service provider and the largest Internet data carrier, will not abandon its customers, Sidgmore said.
“They’re going to see uninterrupted service,” he said.
“Their interactions with the company are going to be largely unaffected.”
Proper accounting would have forced WorldCom to report a net loss in 2001 and for the first quarter of 2002, the company admitted in late June.
The stock, once valued at more than 60 dollars per share in 1999 during the height of the high-tech investment boom, is now worthless.
Jeffrey Kagan, a telecom analyst based in Atlanta, said more layoffs are likely during the coming financial reorganization.—AFP