WorldCom says it will stick by its government users

Putting the best face on its bankruptcy filing, WorldCom Inc. officials this month promised the General Services Administration that the company will continue to serve FTS 2001 customers as it reorganizes.

'WorldCom has assured GSA that the bankruptcy filing will not affect the company's performance to its federal customers,' a GSA spokeswoman said.

WorldCom, with $107 billion in assets, on July 21 became the largest U.S. company ever to file for Chapter 11 bankruptcy protection. GSA previously had announced it was examining the company's fitness for future government contracts.

WorldCom is trying to position itself as an essential component of the nation's critical infrastructure that should not be allowed to fail. Its UUNet backbone handles a large percentage of the nation's Internet traffic.

'I don't see any significant chance of UUNet going dark under any circumstances,' even bankruptcy, WorldCom chief executive officer John Sidgmore said.

The company along with Sprint Corp. supplies long-distance telecommunications services under FTS 2001. GSA figures show WorldCom did $426 million worth of business with the government in fiscal 2001.

Moving a large number of users from one long-distance carrier to another is a complex task, making it unlikely that agencies using WorldCom's FTS 2001 services will make immediate changes. But Sprint officials have said they are receiving requests from WorldCom customers to begin transition planning.

AT&T Corp., the country's largest long-distance carrier and a big player in the federal market, advertised last week that 'there's never been a better time to choose AT&T.'

WorldCom ran full-page newspaper ads the same day, promising to 'emerge as quickly as possible' from Chapter 11 protection. Sidgmore predicted the process would take nine months to a year.

The company also faces allegations of fraud by the Securities and Exchange Commission after announcing it had boosted earnings by nearly $4 billion by improperly accounting for some expenses. Last month, a judge for the Bankruptcy Court for the Southern District of New York approved a Justice Department request to appoint an independent examiner to investigate.

The judge also approved $750 million in interim financing to meet immediate operating costs. The money is part of a $2 billion loan package that Sidgmore said would give WorldCom the operating funds it needs for the next year.

A final hearing on the loan package is scheduled for Sept. 4. The deal, as negotiated before the bankruptcy filing, would put the lenders first in line among WorldCom's creditors.

About the Author

William Jackson is freelance writer and the author of the CyberEye blog.

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