MCI to Emerge From Bankruptcy; Telecom Firm Is to Issue New Securities and Pay $750 Million for Investors
MCI, the nation's No. 2 long-distance phone company, is set to emerge from Chapter 11 federal bankruptcy-court protection today, issuing new stock and bonds to pay off creditors.</br></br>The company also will make a record $750 million payment that eventually will go to investors who were crushed by the company's $11 billion accounting fraud and subsequent record-setting bankruptcy filing.</br></br>MCI, which changed its name from WorldCom Inc. and moved its headquarters to Ashburn, Va., from Mississippi during the bankruptcy, will fully rejoin a beleaguered telecom industry in which overcapacity has been driving prices down at a merciless rate.</br></br>The company will pay the Securities and Exchange Commission $500 million in cash and $250 million in newly issued stock as part of its settlement today, though the proceeds likely won't be distributed to investors for more than a year as the court overseeing the settlement sets up a procedure for filing claims.</br></br>Under the bankruptcy-court settlement, MCI will pay most of its former bondholders 36 cents on the dollar in stock and bonds to be issued today. The old WorldCom shares are worthless. MCI's new shares are expected to trade over-the-counter until it relists on the Nasdaq Stock Market in a few weeks. MCI has 15 days to file audited financial results for 2003 with the SEC.