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MCI Emerges From Bankruptcy

Carrier Hotels Staff Posted Apr 20, 2004

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The largest bankruptcy in U.S. history ended today as the former WorldCom emerged from Chapter 11, rebranded MCI.

The emergence of the huge telecom provider comes 21 months after it sought protection, crippled by an accounting scandal that allowed the company to report billions in bogus earnings. The company, which had more than $103 billion in assets when it filed for bankruptcy, will emerge from bankruptcy with about $5 billion in debt and more than $6 billion in cash.

"MCI's turnaround is a tribute to the human spirit and the amazing will of our 50,000 dedicated employees," said Michael D. Capellas, MCI president and CEO. "This is a symbolic day for MCI employees, who have remained committed to serving our customers. I feel a great sense of pride for all we've accomplished together.

"We are emerging with a new Board and management team, a sound financial position, unmatched global assets, a strong customer base and industry-leading service quality."

WorldCom underwent an enormous restructuring of its real estate assets during its bankruptcy, a process that was managed by a partnership including Node Com Inc., Hilco Real Estate and NAI. CarrierHotels.com, an affiliate of Node Com, participated in the marketing and sale of surplus WorldCom Internet data centers that raised $87 million in three transactions:

• May 23: The 108,336 square foot WorldCom Internet data center in Bridgeton, Mo. is sold at auction for $15.7 million. The buyer is DST Systems of Kansas City, which provides support services for the financial services industry.
  
  
• July 16: The WorldCom center in Somerset, NJ is sold at auction to Wachovia Development for $38.3 million after an auction in which 20 suitors went through 11 rounds of bidding. During the marketing process the facility was leased in its entirety by The Bank of New York, and then sold as an investment property with the lease in place.



• Aug. 5: A unit of MBNA America buys the WorldCom Internet data center in Richardson, Texas (greater Dallas market) at auction for $33 million. MBNA outbid Citigroup, which had been the lead “stalking horse” bidder at $20 million.

Former WorldCom CEO Bernard Ebbers was indicted early last month on conspiracy and securities fraud charges for his alleged role in inflating the value of the company's stock. The charges came shortly after the company's former chief financial officer, Scott Sullivan, pleaded guilty to related criminal charges.

"Our emergence is not the finish line, it's the beginning of a new race," said Capellas. "Somewhere between telecommunications and computing there's a new kind of company, and that's what MCI will be."