Level 3 Bids For Williams Communications

The sources, who spoke to The Associated Press on condition of anonymity, would not provide details of the bid. But The Wall Street Journal, in a report posted on its Web site early Wednesday, said it was for $1.1 billion.

The bid, which includes $450 million from Williams' balance sheet, comes as the Tulsa, Okl.-based company is finalizing a deal with investor Leucadia National Corp. to provide $150 million, the newspaper said.

That move would let Williams emerge this fall from bankruptcy proceedings as a stand-alone company, the newspaper reported, citing unidentified sources.

Level 3, along with other groups, had also sought to obtain a minority stake in an emerging Williams by providing $150 million, Williams spokeswoman Cheena Pazzo said. She would neither confirm nor deny whether Williams has chosen Leucadia's minority stake offer.

The Journal said it wasn't known when Broomfield, Colo.-based Level 3 offered to acquire Williams, but said the offer could complicate Williams' efforts to gain bankruptcy court approval for the Leucadia deal.

Level 3, which earlier this month received $500 million from billionaire investor Warren Buffett and others to fund acquisitions, did not immediately return phone calls from The AP.

At Level 3's annual shareholders meeting Wednesday in Omaha, Neb., CEO Jim Crowe would not comment on whether his company was looking to buy Williams.

Also Wednesday, U.S. Bankruptcy Judge Burton R. Lifland denied Williams' shareholders motion for official representation during the company's bankruptcy proceedings.

Lifland's decision, made immediately after a hearing in New York, means shareholders can still bring their concerns to the court, but they must pay their own legal fees.

'I don't see any shareholders group getting together and retaining legal counsel,' said Phil Redman, a Tulsa stockholder who has organized shareholder meetings. 'We would not have any legal standing in the court anyway.'

Shareholders, whose equity would be wiped out under Williams' prearranged bankruptcy plan, say company executives gave them positive financial projections right up until its failure and that former parent Williams Cos. spun its subsidiary off with too much debt.

Williams Communications, a broadband wholesaler, filed for Chapter 11 bankruptcy protection April 22, reporting assets of $5.99 billion and debts of $7.15 billion. Its reorganization plan would divide its post-bankruptcy assets between bondholders and Williams Cos., a Tulsa-based energy giant.

The company amassed its debt building its 33,000-mile fiber optic network, serving blue-chip customers including SBC Communications Inc. But an industrywide glut of broadband lowered prices and prevented Williams from raising enough cash to pay off the debt.

Level 3 has built a 20,000-mile, worldwide fiber optic network, serving customers such as regional Bell carriers, Internet service providers and cable TV companies.

Telecommunications analysts say the industry must undergo consolidation, which will reduce competition, allowing surviving firms to increase market share and raise prices.

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