WorldCon III

[pms]

I'd love to know who were the leaders that convinced this merry band of
Capitalists that it was a good idea to lend that kind of money to WCOM
without getting the assets as security. (if that was even an option
considering all the debt they already had, wouldn't there be a prior
claim?).  I remember thinking it was a crazy move at the time.  Ya gotta
wonder as to the true motives of the leading lights.  The stock was already
under $2 when they gave them this money.

Lenders to WorldCom dealt legal setback
By Joshua Chaffin and Peter Thal Larsen in New York
Published: July 12 2002 21:54 | Last Updated: July 12 2002 21:54

WorldCom's bank lenders on Friday failed in an effort to recover the $2.65bn
they were owed by the troubled telecommunications firm after a New York
judge rejected their request to impose a temporary restraining order against
the company.

People familiar with the situation said the bank lenders, which include
Deutsche Bank and Citigroup, requested the order from the New York State
Supreme Court on Friday morning in a last-ditch effort to recover at least
some of the $2.65bn unsecured loan they have extended to the company.

The banks are understood to have told the court that the credit facility,
which WorldCom drew down in May, had been given to the company based on
misleading financial information. WorldCom shocked investors last month when
it revealed it had hidden $3.9bn of expenses since the beginning of 2001.

The banks' aggressive move, which bankruptcy experts describe as highly
unusual, suggests that talks between the two sides about a further injection
of funds into WorldCom have completely broken down.

It also further increases the likelihood that the company will file for
Chapter 11 bankruptcy in the near future. Such a bankruptcy would be the
largest in US corporate history. WorldCom is understood to have retained
Lazard, the independent investment bank that has a large restructuring
department, to prepare it for a bankruptcy filing.

The banking group, which comprises more than 20 lenders, had offered to
inject more cash into WorldCom if the company pledged its assets as security
for the existing $2.65bn facility.

In a sign of internal disagreements between WorldCom's lenders, Citigroup on
Friday is understood to have resigned from the informal steering committee
which was determining the banks' strategy with respect to WorldCom.

WorldCom could not be reached for comment on Friday night. Lazard, Citigroup
and Deutsche Bank declined to comment.