WorldCom announced late Tues. it would eliminate MCI and WorldCom...
WorldCom announced late Tues. it would eliminate MCI and WorldCom tracking stocks effective July 12, saving it $284 million year in dividend payments, CEO John Sidgmore said. Move was first major action by Sidgmore, who took over from WorldCom…
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founder-CEO Bernard Ebbers when latter was ousted last month. By eliminating MCI tracking stock company will “build our cash position and simplify our corporate structure,” Sidgmore said. Effective July 12, each share of MCI Group will be converted into 1.3594 shares of WorldCom common. MCI Group shareholders also will receive final dividend payment of 60 cents per share. Conversion ratio and dividend payment equaled 23% premium over MCI Group’s closing stock price Tues., analysts said. MCI rose 38% on news Wed. to close at $2.82, up 77 cents. WorldCom common will continue to trade under symbol WCOM, company said. Analysts had viewed MCI tracking stock, created last year to isolate shrinking consumer long distance business from core WorldCom unit, as failure for some time and said MCI business was declining so rapidly it soon would be unable to pay dividend without help from parent company. WorldCom shares -- which currently reflect Internet and data operations, international and business long distance -- have fared worse, falling more than 97% from high of $64 in 1999 to all-time low of $1.08 last week. Company has been plagued by bankruptcy fears from problems that include $30 billion debt, downturn in core business that slashed $1 billion revenue from 2002 forecast, SEC investigation of finances and controversial loans to Ebbers. Separately, WorldCom continued talks on $5 billion in new financing and said it expected to have $1.5 billion accounts receivable pact in place by today (Thurs.), CFO Scott Sullivan said in a conference call Wed. WorldCom shares rose 16% to close Wed. at $1.65, up 23 cents.