MCI to Ebbers: Timberrr!

Nortel Networks Ltd. (NYSE/Toronto: NT) may be busy tracking down a few million dollars taken by its disgraced former executives (see Nortel Wants Its Bonuses Back), but MCI Inc. (Nasdaq: WCOEQ, MCWEQ) has got bigger fish to fry in that department: some $408 million, in total.

MCI (the carrier formerly known as WorldCom) is stepping up efforts to recoup the money it's owed by former CEO Bernie Ebbers.

Ebbers, currently on $10 million bail and due in court in November(see Sullivan to Testify Against Ebbers), was due to pay back $408 million he borrowed from the carrier over a five-year period, an agreement reached with MCI when he jumped ship in April 2002.

MCI has recovered about $70 million so far, but it wants the remaining $340 million or so, RIGHT NOW. On Friday, it filed suit in U.S. Bankruptcy Court for the Southern District of New York to get the money back -- and to void Ebbers's prior separation agreement, which gives him a pension worth $1.5 million annually as well as an office and use of the company plane.

Keep in mind, however, that Ebbers was one of the more savvy diversifiers of dotcom shares, which he wisely sold and invested in yachting, timber, and ranches. Turning those assets back into shareholder cash is no easy task.

How's the asset recovery gone so far? The $70 million MCI's gotten from the sale of some of Bernie's assets appears to only scratch the surface of what's there. Below is a handy update on the status of his assets, both past and present, and MCI's efforts to recoup the lost dough.

Here's what MCI's got so far:

  • First there was the luxury boat business. Ebbers liked his yacht so much, he bought the company. He paid $14.4 million in 1999 for yacht-building company Intermarine Savannah and then reportedly invested a further $25 million in the business. As Power and Motoryacht Magazine puts it in a review of Intermarine's flagship yacht, the Intermarine 145, "nothing worthwhile can ever be achieved without taking a risk." Hmmm, yes, that fits Bernie's style.

    Ebbers handed the company, which was leaking more than $100,000 a week, over to WorldCom in late 2002. The carrier offloaded it to another yacht builder, Palmer Johnson Savannah, for $9.8 million in February 2003. After costs, MCI netted about $7 million.

  • Next was the Ebbers weekend retreat in Canada, Douglas Lake Ranch, a modest patch of real estate -- 500,000 acres, or about three times the size of New York City. (Handy for the kids, plenty of room for them to run around.) Ebbers bought that for $73 million, and MCI sold it in May 2003 for "gross proceeds" of $68.5 million.

    So what about the remaining lucre? How will that be recovered? There are a few other Ebbers investments:

  • How about 540,000 acres of timber forest in Louisiana, Mississippi, Alabama, and Tennessee? Ebbers owned 65 percent of Joshua Holdings, which bought the timber land for $600 million in 1999. No word on whether this has been sold or not, as MCI didn't return calls.

  • A saw mill, Columbus Lumber, in Brookhaven, Mississippi. Value and status unknown.

  • Looking for organic growth? Look no further than Pine Ridge Farm, which specializes in herbs, flowers, and workhorses (insert your own joke here...).

  • If you fancy owning a sports team, you already missed your chance to buy one from Bernie. He sold his stake in the Jackson Bandits hockey team in 2002.

    — Ray Le Maistre, International News Editor, Light Reading

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    keelhaul42 12/5/2012 | 1:27:39 AM
    re: MCI to Ebbers: Timberrr! I'm not one for vigilante justice but as a Worldom investor the thought of searching for Mr. Ebbers with rope in hand seems viscerally satisfying right now.

    road__runner 12/5/2012 | 1:27:38 AM
    re: MCI to Ebbers: Timberrr! Ebbers really is the perfect republican isn't he ?

    Worked hard and honestly (yeah right!) to make a shipload of money. Now teaches Christian values at some missionary school somewhere in the deep south. One time even suggested that WorldCom was being rung by God.
    road__runner 12/5/2012 | 1:27:37 AM
    re: MCI to Ebbers: Timberrr! typo: should have been "run" not "rung"
    DocGonzo 12/5/2012 | 1:27:36 AM
    re: MCI to Ebbers: Timberrr! This just in from the lunacy desk:


    "The Ashburn-based company confirms New York-based holding company Leucadia National has filed documents with the Federal Trade Commission and the Department of Justice seeking clearance to acquire at least 50 percent of MCI's common stock."

    And of course this makes perfect sense considering:

    "Leucadia has a market capitalization of $3.5 billion, compared to MCI's market cap of $5 billion."

    Would be a fitting end considering the market cap copmparison of MCI and WCOM when they were wed.

    Film at 11.


    whyiswhy 12/5/2012 | 1:27:36 AM
    re: MCI to Ebbers: Timberrr! Now if only he would stand in front of the congregation, and weeping like a baby, ask to be forgiven for his "weakness".

    And the term you are looking for is neo-conservative or neo-Republican. Basically the Republicans apre-Reagan, when they realized the Democrats could be overtaken on the "faith" front with an odd coalition of capitalists, Mormons, Re-born Southern Baptists and ultra-right wing Zionists.

    Anti-welfare (capitalists), anti-gay (Mormons, Baptists), anti-union (Capitalists, Mormons), pro-Isreal (Capitalist oil terrorist wedge issue).

    Real Republicans trace their roots back to Lincoln, Roosevelt (Teddy) and Eisenhower, not to Falwell, the Likud party, or the Chinese and Soviet Mafias.

    road__runner 12/5/2012 | 1:27:35 AM
    re: MCI to Ebbers: Timberrr! why

    you are correct, its the neo-conservatives that have hijacked the Republican party.

    BTW here's a fun list of the most outrageous "cash-out" CEOs of the late 90s. Bernie escaped being on this list somehow though has probably cashed out as much stock directly or indirectly as these guys.

    It will be interesting to compare these amounts with their company's current valuations. There are many CEOs on this list who individually sold more stock in just those 3 years than their entire company's current capitalization! My personal favorite is Naveen Jain of Infospace who was publicly claiming to be building a trillion dollar company. Now those were the days! :-)

    road__runner 12/5/2012 | 1:27:34 AM
    re: MCI to Ebbers: Timberrr! This is the actual list of the individual sales, the previous one was of total insider sale amounts.

    st0 12/5/2012 | 1:27:32 AM
    re: MCI to Ebbers: Timberrr! MCI at least will get "something" back... how about all the competitors of WCOM? they lost due to the phony numbers and pump of WCOM CEO, but will not see a penny... He really should pay back to the industry and share holders of many companies...(including ATT and Armstrong).

    Lite Rock 12/5/2012 | 1:27:32 AM
    re: MCI to Ebbers: Timberrr! Regardless of political positions, this is a test of the judicial system! Does the rich crook have the ability to thwart that system?

    With a major portion of my retirement savings now gone, I want to see Ebbers not only lose all of his assets I want him to experience the collective pain that his actions have inflicted on so many people.

    The king is dead. Long live the king!

    lightbeer 12/5/2012 | 1:27:31 AM
    re: MCI to Ebbers: Timberrr! The list would be more complete if they cross referenced back to which politicians benefited from political contributions from these visionary CEOs.
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