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
<<   <   Page 2 / 4   >   >>
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.
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:
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)
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
go_to_the_light 12/4/2012 | 10:53:05 PM
re: Williams Ponders Bankruptcy
We finally have a real answer to this one...


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

RJC 12/4/2012 | 10:52:59 PM
re: Williams Ponders Bankruptcy Matt's explanation of the Tech Farm is still on

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

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.


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!
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.
<<   <   Page 2 / 4   >   >>
Sign In