Williams Ponders Bankruptcy

Williams Communications Group (NYSE: WCG) stock lost nearly 60 percent on Monday, after the company announced that it is considering Chapter 11 bankruptcy in order to clean up its balance sheet (see Williams Considers Chapter 11).

The company’s stock closed down $0.20 (56.86%) to $0.22.

This news comes less than two weeks after the company reassured investors that it would not default on any loans or file for bankruptcy (see Williams: Blowing Wind? ). On a conference call with investors and analysts on February 13th, Scott Schubert, executive vice president and CFO, said that the company would restructure its balance sheet without “needing to seek bankruptcy court protection.”

But it looks as though the company has rethought its strategy. In a press release issued this morning, the company stated that it is in talks with its banks and other lenders to come up with a suitable solution, which could include bankruptcy. According to the press release, the company expanded its options for reorganizing its balance sheet on February 22nd, after it realized that some lenders, other than banks, would not likely participate in the restructuring.

As of last Friday the company’s debt was already rated in the C category, well below what most in the industry would consider investment-grade debt.

Like other next-generation telecom carriers that built out massive nationwide and international networks, Williams is saddled with tremendous debt. Currently, the company owes its lenders approximately $5.16 billion, with interest payments ballooning to nearly $500 million annually.

If Williams files for bankruptcy it will be following in the footsteps of other carriers like Global Crossing Ltd. (NYSE: GX), which filed in January, and 360networks Inc. (Toronto: TSX), which filed in June of 2001 (see Global Crossing Falls Overboard and 360networks Calls It Quits). Other carriers are struggling with cash-flow and liquidity issues. Qwest Communications International Inc. (NYSE: Q) recently was forced to draw on a $4 billion of credit and Level 3 Communications Inc. (Nasdaq: LVLT), which is currently trading at around $3 a share, also has investors nervous.

Williams plans to cut its total costs by 25 percent, which will likely translate into layoffs of the same magnitude.

— Marguerite Reardon, Senior Editor, Light Reading
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broadbandboy 12/4/2012 | 10:52:03 PM
re: Williams Ponders Bankruptcy cbenton, what do you mean by "better ATM competitor?" They carry inter-LATA traffic for other carriers over a GX550 based network, so what did they do wrong? I'd like to know.

cbenton 12/4/2012 | 10:52:32 PM
re: Williams Ponders Bankruptcy Williams, granted, was affected by the demise of the telco market...but they could have been a better ATM competitor had they listened to their vendor for what was best for them to better support their own customers and problem resolutions...
geof hollingsworth 12/4/2012 | 10:52:37 PM
re: Williams Ponders Bankruptcy Doesn't seem to have worked any better for Sigma Networks than Tulsa has for Williams.
optical_man 12/4/2012 | 10:52:39 PM
re: Williams Ponders Bankruptcy "Author: layer3 Number: 30
Subject: Re: Fall Guy Date: 2/27/2002 10:07:20 AM
Where should we open the next Carrier? Fairbanks Alaska?
How about Cedar Rapids, Iowa (McLeod) or Butte, Montana (Touch America)... "

[email protected]!! I forgot about those. Well, they are nearing (or in) bankruptcy.
McLeod, ISP who got out of control.
Touch America, Energy plant operator who made the brilliant move to sell all the energy plants (right before California energy crisis), and even more astutely, spent all their money on trying to make a phone company (right before the telecom crash). Real insightful crowd up there in Montana.
Cyras Forever 12/4/2012 | 10:52:39 PM
re: Williams Ponders Bankruptcy Other ideas for next-gen carriers:

San Quentin, California

Attica, New York

Rykers Island, New York (
layer3 12/4/2012 | 10:52:40 PM
re: Williams Ponders Bankruptcy Where should we open the next Carrier? Fairbanks Alaska?

How about Cedar Rapids, Iowa (McLeod) or Butte, Montana (Touch America)...
optical_man 12/4/2012 | 10:52:41 PM
re: Williams Ponders Bankruptcy "Author: KeithJamesMc Number: 27
Subject: Same trick went on at Sycamore Date: 2/27/2002 9:25:59 AM "

I can guarantee you that EVERY one of these Ascend spinoffs that tried this slimery has their stock sitting at near zero right now. It's deceptive practice, the world figured it out, and enron is changing how the world has to act.
There's a section north of Boston where this was especially rampant, now they're paying the piper (actually no one's paying anyone with stock worth near ipo (or below) levels!)
The new thing now is ISSUE NEW STOCK INTERNALLY.
Yup, they're doing it. Hope you don't own any shares, cause your going to see 'increased selling pressure in the months to come' as these folks keep cashing out their new found options.
Watch yourself, the house of cards hasn't yet fallen completely down.
optical_man 12/4/2012 | 10:52:41 PM
re: Williams Ponders Bankruptcy Keith,
You can't really blame the folks at Williams for letting all this happen, and letting their company collapse.
If they had only accepted those Stock Options from the Microsoft Corporation, they may have gotten that neat 'Internet Explorer' browser thingy for their management. Then they could have read some business publications on-the-line and seen what was going on. Unfortunately, all they had was the Tulsa World newspaper, and well, you know, you don't get much from a paper that has 14 pages of Funnies and a "Local Sports" section only.
So, score is
1) Dead Carrier from the Bahamas
2) Dead Carrier from Oklahoma
(see the locales? I coulda told you that neither of these places are conduncive to business let alone a Phone Company).
Where should we open the next Carrier? Fairbanks Alaska?
KeithJamesMc 12/4/2012 | 10:52:41 PM
re: Williams Ponders Bankruptcy From FORTUNE March 2000


KeithJamesMc 12/4/2012 | 10:52:42 PM
re: Williams Ponders Bankruptcy
DonGÇÖt just have Bross as the Fall Guy: the whole scam was well documented and reported at the time and involved lots and lots of people.

1.From 2000, documenting others involved:

2.Interview with Vinod Kholsa, VC star about GÇ£EthicsGÇ¥

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