Dynamic Daring Daily |  |
Front Page « Metro « Business « International « Sports « National « Editorial « Page Eight « Feature « ARCHIVE MAIN PAGE |  |
Judge okays WorldCom settlement REUTERS, PHILADELPHIA, July 8 A federal judge on Monday approved WorldCom Inc’s plan to pay a record $750 million to settle fraud charges in its historic accounting scandal, clearing another hurdle for the beleaguered telecommunications company’s emergence from bankruptcy. US District Judge Jed Rakoff in New York gave the green light to WorldCom’s settlement with the Securities and Exchange Commission, which calls for the company to pay $500 million in cash and $250 million in new stock in the reorganized company. The payout will be distributed to bondholders and shareholders who lost more than $200 billion in the company’s downfall, which was triggered by its $11 billion accounting scandal. WorldCom agreed to sweeten the payout with stock after Rakoff raised questions about the settlement. “The proposed settlement is not only fair and reasonable but as good an outcome as anyone could reasonably expect in these difficult circumstances,” Rakoff said in his order. The monetary fine was initially set at $1.5 billion, and later increased to $2.25 billion to reflect the revised settlement, but WorldCom will pay only $750 million because it is in bankruptcy. The settlement still must be approved by the bankruptcy court. Several rivals, such as AT&T Corp and Verizon Communications Inc, had argued that the settlement and bankruptcy reorganization process would let WorldCom escape too easily and slash its $41 billion debt load to a fraction of that amount. The court, however, rebuffed the rivals’ arguments that WorldCom should be liquidated. Despite “whatever advantages in debt reduction WorldCom will realize ... any suggestion that companies as large and well-positioned as Verizon and AT&T will not be able to compete effectively with the new WorldCom/MCI lacks credence,” the judge said in his order. WorldCom, based in Ashburn, Virginia, previously agreed with the SEC not to violate securities laws in the future. It has made several moves to distance itself from the accounting scandal and its past management team. The company did not admit or deny wrongdoing. It still faces lawsuits from shareholders. In forging the settlement, the SEC said on Monday it took into consideration WorldCom’s cooperation with the agency and the remedial acts it made to strengthen its corporate governance. “We have committed to being a role model of corporate governance and the significant changes we have already implemented are a testament to that commitment,” WorldCom Chairman Michael Capellas said in a statement. The company has overhauled its board of directors, hired a new chairman and a new chief financial officer, and installed more stringent procedures in its accounting department. “The court is aware of no large company accused of fraud that has so rapidly and so completely divorced itself from the misdeeds of the immediate past and undertaken such extraordinary steps to prevent such misdeeds in the future,” Rakoff said in his order. Later this month, a court-appointed monitor is scheduled to release a report with other recommendations to strengthen WorldCom’s corporate governance.

| COPYRIGHT © NEW AGE 2003 Mailing address Holiday Building, 30, Tejgaon Industrial Area, Dhaka-1208, Bangladesh. Phone 880-2-8114145, 8118567, 8113297 Fax 880-2-8112247 Email newage@bangla.net Web Designer Zahirul Islam Mamoon