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Qwest Plans New Bid for MCI

Richard Notebaert is not happy. Not happy at all. In fact he's so angry, he's sent a rather stern note to the boys and girls at MCI Inc. (Nasdaq: MCIP).

Having lost out to Verizon Communications Inc. (NYSE: VZ) in the race to buy MCI, the CEO of Qwest Communications International Inc. (NYSE: Q) has written a sniffy letter to the MCI board saying he plans to submit a renewed bid for the long-distance carrier, and this time he doesn't expect to be ignored (see Verizon Wins Tussle for MCI).

Nurse, pass the smelling salts!!

Notebaert is furious on numerous counts, and detailed his various peeves in the letter sent yesterday to MCI chairman Nicholas Katzenbach, which Qwest then filed with the Securities and Exchange Commission (SEC) so that we could all enjoy the show.

First off, he's convinced that MCI has accepted an inferior offer by agreeing to Verizon's $6.75 billion bid -- inferior by a cool $1.25 billion compared with Qwest's offer (see Qwest Filing Details $8B MCI Bid).

Second, Notebaert says the business and operational aspects of a Qwest acquisition are far superior. "We would like to remind you that Qwest's proposal is superior to the Verizon proposal because our regulatory approval process is likely to be completed at least six months more quickly," he wrote, "and the value to the MCI shareholders from participation in approximately 40% of the synergies in a Qwest transaction will substantially exceed the value of synergies that would be received by MCI shareholders in a Verizon deal."

Third, he really really really wants to buy MCI. (He didn't put this in the letter, as such, but you can tell he's keen).

And last, but by no means least, Notebaert is absolutely fuming that MCI ignored Qwest's $8 billion offer and that MCI treated Verizon's approach with more respect. "We have not received any response from MCI or its advisors on the terms of our February 11 proposal, as reconfirmed on February 13. If we had received this response, we may have been already able to communicate to you a modified offer that would be beneficial to MCI shareholders."

And he's not done yet. "In addition, we were provided limited access to due diligence information regarding MCI, which we have been informed was substantially less than the access provided to other parties," writes the Qwest CEO (while probably trying to control his flaring nostrils and trembling bottom lip).

So what's next? A bigger, better bid with bells and knobs on.

Notebaert notes in the letter that Qwest now has a copy of the agreed Verizon deal, "and we are in the process of evaluating it." And once that deal has been picked over, pinned to the wall and punctured with Qwest darts, "we do intend to submit a modified offer to acquire MCI and we would expect MCI and its advisors to engage us in a meaningful dialog regarding the merits of our offer and we would further expect access to due diligence information consistent with that offered other parties."

And if meaningful dialog is not forthcoming? We expect to see toys thrown from the pram, at the very least.

Qwest's stock dipped 13 cents, more than 3 percent, on Thursday to close at $3.84, which won't help the value of any planned stock-based bid. Verizon's share price fell 44 cents, just over 1 percent, to $35.68.

MCI's share price also fell Thursday, down 21 cents, or 1 percent, to $20.66, valuing the operator at $6.57 billion. But in pre-market trading this morning it shot up 88 cents, more than 4 percent, to $21.75.

— Ray Le Maistre, International News Editor, Light Reading

nowhereman 12/5/2012 | 3:26:03 AM
re: Qwest Plans New Bid for MCI Federal prosecutors accused a former Qwest Communications International Inc. executive Friday of illegally arranging $2.9 million in gains for himself and others by secretly cashing in on investment opportunities at the expense of the company and its shareholders.

Marc B. Weisberg, a former senior vice president, was charged with eight counts of wire fraud and three counts of money laundering.

If he is convicted, prosecutors want Weisberg to forfeit the $2.9 million in alleged gains, including cash and a villa in the Cayman Islands.

Weisberg is at least the fifth former Qwest executive to face federal charges as a result of an ongoing Justice Department investigation.

Weisberg is accused of using his position between 1999 and 2001 to obtain [IPO] investment opportunities from several vendors or potential vendors for himself, his parents, father-in-law, children, his wife's personal trainer, a brother-in-law and a secretary, among others.

Weisberg is also accused of taking personal advantage of some investment opportunities that vendors would offer Qwest.

At the time, the company used such opportunities as incentives to retain top employees under strict reporting conditions. Prosecutors alleged Weisberg did not inform the company when he made the diversions and destroyed accompanying personal and corporate records.

In some instances, Weisberg tried to arrange the investment opportunities while negotiating contracts with the companies involved, a violation of Qwest policy, the indictment said.

The indictment said companies whose stocks were involved included Alteon Web Systems, ONI Systems Corp., Tellium, Rhythms and Rhythm NetConnections Inc.

Each wire fraud count carries a sentence of up to five years and a fine of up to $250,000. The money laundering counts carry sentences of 10 to 20 years and fines of $250,000 each.

The Denver-based Qwest Communications International Inc. has been faced with legal challenges since 2002 when the Securities and Exchange Commission began an inquiry into accounting irregularities.

Last fall, Qwest agreed to pay a $250 million fine to settle civil fraud charges. The SEC accused Qwest of a "massive financial fraud" for falsely reporting sales or trades of capacity on its fiber-optic cables as recurring revenue. Qwest agreed to the settlement without admitting wrongdoing.

Separately, former midlevel manager Thomas Hall pleaded guilty in September to falsifying documents and was sentenced to probation. Grant Graham pleaded guilty in May to being an accessory after the fact to wire fraud with reckless indifference. He has not been sentenced.

John Walker and Bryan Treadway were acquitted in April of criminal fraud and conspiracy.

Weisberg earlier was named in a lawsuit filed by Qwest investors accusing former company executives of misleading investors and fraudulent accounting, but a federal judge dismissed him as a defendant in January 2004.

http://story.news.yahoo.com/ne...

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Does MCI really need more crooks to help them run the company even further into the ground?

Why in Hell is the federal government allowing two organizations with such a recent and extensive history of criminal activity to even attempt to merge?

These guys remind me of the dons in the Godfather movies. One of them even has a hideaway in the Caribbean.
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