OK, I'll call you crazy. Your money is gone. Bondholdres, not stockholders will end up with what is left of the company...here is a copy of an internal WCOM email from the president, wherein, among other things, he says the chances of existing holders of getting anything for their shares is basically nil:
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---- Original Message ----
Today is a difficult day for all of us at WorldCom. As you are
aware from listening to the news and reading the papers WorldCom
has filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. After reviewing all the options available to
us, the board of directors decided this option offered the best
way to provide for our company's future. The filing applies
only to WorldCom's U.S. operations.
As part of this process, we have obtained an agreement to
arrange up to $2 billion in debtor-in-possession (DIP) financing
to support our operations. We have already secured a commitment
of $750 million of this amount - which we believe is sufficient
to carry us through our current needs.
I regret that we are in this position. We fought hard to avoid
it. Even before we discovered the accounting issues leading to
our announcement, WorldCom had a significant debt problem. From
the first day I took over as CEO, I have been talking to our
lenders about what we could do to restructure our debt. This
debt had become the enemy of our company. It threatened our
viability and drove our stock price down to the one-dollar
range. Then, the need to restate our financials essentially
closed the capital markets to us. These problems, along with
accelerated payment demands from our vendors, forced us to seek
the protection of Chapter 11.
Taking this action, then, was the best way to help the greatest
number of people - particularly our customers and you, our
employees. And it was the only way to ensure our company's
future.
Like you, I've been through the range of emotions during the
last couple of months - shock, anger and embarrassment when we
discovered the accounting problems; fear over the consequences;
and concern for you and your families. I apologize for what has
happened. I can only tell you I wasn't there for the past
indiscretions, but I will commit to being there for the future --
and I hope you will be by my side. We have created one of the
most successful companies in American history, and we shouldn't
lose sight of our accomplishments.
While we seek reorganization under the protection of the
bankruptcy court, we will continue to operate and manage our
business in the normal course. And we will work with our
creditors and with the court to restructure our debt and our
operations -- enabling us to emerge from Chapter 11 as a much
stronger, healthier company.
I cannot tell you exactly how long this process will take. My
hope and my plan is for it to be a brief time. It is likely,
however, to extend at least through the first quarter of next
year. One of the primary hurdles to restructuring our finances
and emerging from Chapter 11 is completion of audited financial
statements.
This will be a challenging time. We will likely operate on
budgets that are smaller than we're used to. In addition, we
will be looking to sell off our non-core businesses. It will be
difficult, but I believe it will be worth it because we have the
opportunity to emerge from this process a company that still
boasts the best set of assets in the telecom industry, but
without our current debt burden.
To make that happen, I need your help. Only through your
understanding of what's going on and only through your continued
dedicated work can we maintain customer confidence. If you are
confident about our company - and you have every reason to be -
please help us spread that message to our customers, and help us
attract new customers. Only with this link in the chain - you -
will WorldCom be able to move forward.
The new management team is committed to using this
reorganization period to regain our company's focus, strength
and industry leadership. Other companies have taken this route
and succeeded - Continental Airlines, Texaco, Federated
Department Stores and Southland Corporation, to name a few. We
intend to do the same.
Now, I know you have many questions. I can answer just a few in
this note:
--Compensation for other than senior management employees will
continue based on the same criteria we have always used. One of
the reasons we filed for protection is because it provides the
best alternative for preserving jobs for our employees.
--There is no plan to change existing benefits.
--Chapter 11 does not necessarily mean more layoffs. We did, as
you are aware, announce a layoff of many employees last month as
a result of our financial condition - unrelated to the
accounting issues. We will continue to review operating plans to
see what's in the company's best interest, but I certainly hope
to retain the vast majority of our employees.
--Unfortunately, it is highly unlikely that investors will
receive any value for their WorldCom Group or MCI Group stock.
I want to assure you that we are taking every step to determine
precisely who is responsible for the accounting improprieties
that ultimately led to the Chapter 11 filing. We continue to
cooperate fully with all governmental investigations. We have
launched a rigorous independent investigation of our own, led by
William R. McLucas. And, we have added two individuals of
unimpeachable integrity to our board of directors - Nicholas
Katzenbach, former Attorney General of the United States, and
Dennis Beresford, former Chairman of the Financial Standards
Accounting Board (FASB) - to oversee the McLucas Investigation
and ensure these improprieties never recur. It is my intention
that our company once again becomes synonymous with business
practices of the highest integrity and ethical standards.
As I said, this is not a path we wanted to take - but I think
you can see that it is the right thing to do for the future of
the company we have all helped to build. With integrity,
communication and focus, we will ultimately benefit from this
period.
Thank you, as always, for your continued support and excellent
work.
John Sidgmore
----
WorldCom, Inc. Corporate Employee Communications
