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Employment

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
http://www.lightreading.com
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.

BBboy
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 "

Keith,
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

http://www.business2.com/artic...

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:
http://www.business2.com/artic...
http://www.thestandard.com/art...

2.Interview with Vinod Kholsa, VC star about GÇ£EthicsGÇ¥
http://www.byteandswitch.com/d...

Cyras Forever 12/4/2012 | 10:52:42 PM
re: Williams Ponders Bankruptcy SIGN ME UP!
Cyras Forever 12/4/2012 | 10:52:42 PM
re: Williams Ponders Bankruptcy These are some great quotes!

My favorite is Vinod's reasoning re: who gets the options at a carrier:

"The first important question is who is making the purchasing decision [at the carrier]? The person making the decision should not be the one getting the equity..."

So ONI basically went to Williams and gave Matt Bross (who has TONS of influence in the decision-making process) 100's of 1'000's of shares out of charity? What, were those shares going to go to the Salvation Army otherwise? There was no attempt to influence decision-making in extending those options???????????

Vinod - you give shares to anyone you can find close to, or in, the decision-making chain - you always have...do you want to correct your quote above?
country_boy 12/4/2012 | 10:52:52 PM
re: Williams Ponders Bankruptcy No, its still there...
DocGonzo 12/4/2012 | 10:52:52 PM
re: Williams Ponders Bankruptcy Is it me or did this web page magically disappear?
GW Pearson 12/4/2012 | 10:52:54 PM
re: Williams Ponders Bankruptcy You Know, once Williams Comm gets rid of their debt, they really look like a pretty good company. I think this is a tough phase for them, but overall, I still expect they'll be a player for a long time to come.
GW Pearson 12/4/2012 | 10:52:54 PM
re: Williams Ponders Bankruptcy Wow! That is a real interesting video. Especially in light of the way things seem to be turning out.

thanx for the post, RJC!
PantomineHorse 12/4/2012 | 10:52:57 PM
re: Williams Ponders Bankruptcy "Anyone out there know what are all the carriers in North America that are either financially in trouble, on the verge of bankruptcy or are bankrupt?"

You missed T, BRW, CWP, MCIT, and a few others.

Guidelines:

1.) Check carrier's short & long-term debt levels & see if they can adequately cover.

2.) In doing this analysis, discount excessive swap revenue. Make sure revenue is either a direct sale to an end-user or a legitimate swap.

3.) Recognize carriers generally have very little pricing power. Many are likely engaged in FORWARD sales (for survival), so even if the economy were to turn & demand-supply were more in balance, certain carriers may be locked into low priced commodity sales for years, a practice known in the commodities business as hedging. Bad for industry, since it results in price deflation (eg. voice). It could be either good or bad for carriers conducting such practices.

4.) A carrier may have credit lines with the banks for short-term relief. If using them, then the bank is being used as a back-stop. Caution.

5.) Urge extreme caution on "carriers" who have SPVs established to trade other commodities. They seem to do a lousy job. Examples: Enron, Dynergy, Tyco.

If you find a stable carrier that shows some promise, let us all know.

Consider building or joining a telecomm business venture built on trust & honesty.

Good luck!
RJC 12/4/2012 | 10:52:59 PM
re: Williams Ponders Bankruptcy Matt's explanation of the Tech Farm is still on
http://www.wcg.com/tfs/tfswebc...

I find it interesting that the main Williams.com page no longer links to wcg.com.

lightman60 12/4/2012 | 10:53:00 PM
re: Williams Ponders Bankruptcy Anyone out there know what are all the carriers in North America that are either financially in trouble, on the verge of bankruptcy or are bankrupt? This will help me understand whether I should consider switching careers out of the Telecom sector. What I have in my list so far is:

Williams - rumours of bankruptcy
Global crossing (This was a big Wireless carrier also) - bankrupt and under investigation by the SEC, FBI.
Worldcom - rumours of financial trouble
Enron - bankruptcy and under investigation by SEC, US comittee
QWest - cost and job cuts and they are under investigation by SEC since they are partnered with Global Crossing
Level 3 - you just told me they shut down their operations in Asia, that would explain why my aunt told me that JDU decided to shut down their mfg operation plant in China and JDU has since moved back their mfg operations in China back to Ottawa.
SBC Communications - lay-offs
BT - Low sales
Bell South - capital spending reductions
Sprint - capital spending reductions


go_to_the_light 12/4/2012 | 10:53:05 PM
re: Williams Ponders Bankruptcy
We finally have a real answer to this one...

EVERYONE!

:-)
lufiber 12/4/2012 | 10:53:07 PM
re: Williams Ponders Bankruptcy It's that expandable sphere gizmo. Bross looks like a cross between Roger Clinton and Matt Foley, who lived in a van down by the river (Chris Farley). www.who2.com/chrisfarley.html
skeptic 12/4/2012 | 10:53:10 PM
re: Williams Ponders Bankruptcy "Networking companies that already have gone public say that the practice of issuing options and directed shares is having an impact on their business. "I'd guess that pre-IPO stock grants figure in well over half the deals we lose to startups these days," says a senior executive at a major networking company, who spoke on condition of anonymity. "I suspect that one day there will be investigations into this by the SEC, DoJ, Congress, and so on, but right now everybody's making too much money for much outrage to fuel such investigations," the executive adds."

Well, the optical stock scams have run their course. I guess it's time for the SEC, DoJ and Congress to get to work on checking this mess out.
---------------------

Sure. About the same time they look into vendor
financing of equipment by big companies and where
all that money went. Don't think its a level
playing field or start to feel sorry for the
big incumbant equipment providers. They run
their own scams, they just don't involve stock
options but they are just as dirty and perhaps
even more of a mess.

optical_man 12/4/2012 | 10:53:10 PM
re: Williams Ponders Bankruptcy Author: G Man Number: 9
Subject: Matt Bross Story link Date: 2/25/2002 7:40:02 PM
The link to Light Readings earlier story on Matt Bross and his profiting by taking stock grants from vendors suppling Williams:
http://www.lightreading.com/do...
Great bed time reading...
(and thanx again to L.R.!!) You guys and gals are Great!!

Nice article, but doesn't mention all of them. There's one of them that gave him SO many stocks (for, as I believe, a positive "we're implementing their product" press release) that it was, in my opinion, disgusting.
Hint: check out the sales that Williams made (as well as Mr. Matt). Williams got over 10 TIMES the stock that Mr. Matt got on this little deal. Go to an Insider Trading site and look it up.
When the FULL story comes out, it's going to be UGLY, if not criminal.
(hope the ambulance/stock chasing lawyers are reading, because they could clean up on this sleaziness)
G Man 12/4/2012 | 10:53:11 PM
re: Williams Ponders Bankruptcy My guess is that the ONLY reason Matt Bross is still working at WCG is to PREVENT the other execs from using him for THE FALL GUY (see "Maltes Falcon" for a good image of the bunch of theives running WCG today.)

But, hey, sooner or later, the thought will come to them.
Ramona_ThePest 12/4/2012 | 10:53:11 PM
re: Williams Ponders Bankruptcy I heard that Matt Bross is supposed to be a deeply religious family man.

Goes to show ya - these illegal, outrageously unethical acts can be perpetrated by all types.
G Man 12/4/2012 | 10:53:12 PM
re: Williams Ponders Bankruptcy This is one quote from the earlier L.R. article that has got to be framed,...

"Networking companies that already have gone public say that the practice of issuing options and directed shares is having an impact on their business. "I'd guess that pre-IPO stock grants figure in well over half the deals we lose to startups these days," says a senior executive at a major networking company, who spoke on condition of anonymity. "I suspect that one day there will be investigations into this by the SEC, DoJ, Congress, and so on, but right now everybody's making too much money for much outrage to fuel such investigations," the executive adds."

Well, the optical stock scams have run their course. I guess it's time for the SEC, DoJ and Congress to get to work on checking this mess out.
G Man 12/4/2012 | 10:53:13 PM
re: Williams Ponders Bankruptcy The link to Light Readings earlier story on Matt Bross and his profiting by taking stock grants from vendors suppling Williams:

http://www.lightreading.com/do...

Great bed time reading...

(and thanx again to L.R.!!) You guys and gals are Great!!
G Man 12/4/2012 | 10:53:13 PM
re: Williams Ponders Bankruptcy Hey Light Reading,

could you provide links to your earlier work on Matt Bross?

This story is too good to be fiction.

Incredible.
G Man 12/4/2012 | 10:53:14 PM
re: Williams Ponders Bankruptcy They even gave the stock pumping operation a fancy name. Check out the WCG webpage, though the funky video of Matt Bross explaining stock pumpin with a plastic tinker-toy is gone. Check out "Tech Farm".

What a hoot!
G Man 12/4/2012 | 10:53:14 PM
re: Williams Ponders Bankruptcy O-Man,

The Public is ALREADY aware, at least, there is plenty of information on this in the public domain already.

In fact, this here electronic rag (LR)has done a GREAT job in exposing the shenanigans of Mr. Bross and his co-conspirators. And, I am EXTREMELY pleased that someone had the large electronic testicles to tell the story in the open.

But, where is the SEC in all of this? I assume that those fellas and felines can read as well as you and me.

what a DISGRACE to public service they are.
optical_man 12/4/2012 | 10:53:14 PM
re: Williams Ponders Bankruptcy Author: G Man Number: 3
Subject: Re: Matt Bross Date: 2/25/2002 7:12:57 PM


Agreed.

I've read about WCG's stock pumping scams, how "testers" were given stock grants in start-ups that Bross had an interest in, how these optical start-ups IPOed to incredible heights after WCG announced they were deploying the start-up's equipment in the WCG network. How much of what was deployed was good, old fashioned CRAP, and how Matt Bross and the other WCG execs walked away with $$MILLIONS$$ in personal wealth.


Yup. I personally know of one startup who gave him THOUSANDS of shares. And I'm just one person in one little company in one area of technology that Matt Bross was investigating.
Question, will this make the light of day in bankruptcy court?
G Man 12/4/2012 | 10:53:15 PM
re: Williams Ponders Bankruptcy Major customer is SBC, followed by (in no particular order) KDDI, Verizon, and Boeing.

Lots of vendors (Lucent, Ciena, Sycamore, Corvis, ONI, Cisco). Just about every one will be lining up, hat in hand, when the CRAP Matt Bross and Howard Jazen have cooked up hits the fan.

G Man 12/4/2012 | 10:53:16 PM
re: Williams Ponders Bankruptcy Agreed.

I've read about WCG's stock pumping scams, how "testers" were given stock grants in start-ups that Bross had an interest in, how these optical start-ups IPOed to incredible heights after WCG announced they were deploying the start-up's equipment in the WCG network. How much of what was deployed was good, old fashioned CRAP, and how Matt Bross and the other WCG execs walked away with $$MILLIONS$$ in personal wealth.

All, it seems, without the SEC batting an eye lash.

Just amazing.

I know ERON and Global Crossing have the public attention now. But when the books get opened to the public, MAN, there is going to be hell to pay!!!
docsisdude 12/4/2012 | 10:53:17 PM
re: Williams Ponders Bankruptcy or should i say, who are those owed significant money from williams?
Reality Bytes 12/4/2012 | 10:53:18 PM
re: Williams Ponders Bankruptcy If I were a shareholder or creditor of Williams I would be having an even closer look now at the dealings of Matt Bross. It is now very evident that many deployments were not in the interest of the company, rather they were in the interest of Matt Bross' pockets. Just how much has he made from the shares of system vendors that Williams have deployed?

"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."
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