MCI to Pay Record Settlement
The Wall Street Journal reported this morning that WorldCom has agreed to settle with the SEC to pay $500 million to investors as part of the resolution of the agency's fraud case against the carrier. Court approval of the settlement is still awaited. A separate settlement must be reached to reimburse creditors and debtors, the paper said.
MCI did not answer inquiries for information at press time. An SEC spokeswoman declined to comment.
The news is the partial outcome of terms agreed to by the SEC and WorldCom in November 2002 (see Worldcom Settles With SEC). It seems a fittingly spectacular milestone in the ongoing saga of MCI's implosion, which led to the largest bankruptcy in U.S. history and a mountain of investigation and litigation for its executives, including ex-CEO Bernard Ebbers (see WorldCom Files for Bankruptcy and Ex-WorldCom Execs Charged With Fraud).
Last month, MCI announced court approval of its restructuring plan, and CEO Michael D. Capellas said he hoped the company will emerge from bankruptcy this fall (see WorldCom Plans Re-Emergence). He said WorldCom has successfully completed the basic steps needed to emerge from Chapter 11 protection, outlined in the "100 Day Plan" unveiled earlier this year (see Capellas Sets 100-Day Strategy).
It's not clear yet how the enormous payout will affect MCI's plans -- or what impact the settlement may have on industry forces, such as other carriers, that have objected to any emergence of MCI from bankruptcy at all (see The Post-Chapter 11 Hangover ). For months, there's been resistance to MCI's emerging as a new player with a reduced debt. Some think the carrier could spark a price war in a market already suffering from intense competition and woeful lack of demand.
Others say MCI hasn't yet gotten its just desserts, although this settlement may adjust that view.
Stay tuned for more stories on the settlement as information becomes available.
— Mary Jander, Senior Editor, Light Reading