Report: Major WorldCom Investor Wants Giuliani to be Named Chairman

The investor, David Matlin, has started a fund with Giuliani to accumulate at least one-third of WorldCom's bonds. Matlin's group of investors could retain the right to appoint board members if it owns more than a third of the company's bonds.

Sources close to the situation told the Journal that Matlin, who heads a bond-investor group backed by Credit Suisse First Boston, is expected to urge U.S. Bankruptcy Judge Arthur Gonzalez to accept a reorganization plan under which Giuliani would become chairman.

WorldCom, the telecommunications giant, admitted a $9 billion accounting fraud earlier this year and is mired in the biggest bankruptcy in U.S. history.

Michael Capellas, who was appointed chairman, chief executive and president on Friday, agreed to join WorldCom after winning the approval of its committee of official creditors. Matlin, believed to be WorldCom's largest creditor, is not a member of the committee and has not expressed complete confidence in the hiring of Capellas.

Capellas, the former Compaq Computer Corp., told the Journal that he wanted to meet with the former mayor, who founded a consulting company to advise companies on risk management.

'What's not to like? He's 'Man of the Year,' Capellas said. 'We are going to see if there is a role for Giuliani. We are moving forward and assembling a world-class board.'

Capellas, 48, comes to WorldCom after serving as president of Hewlett-Packard Co. after its $19 billion acquisition of Compaq Computer Corp. He had been Compaq's boss for nearly three years.

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