IDT To Press Bid For Parts Of Failing WorldCom

Howard S. Jonas, chairman of the board and treasurer of Newark-based IDT, said his company will continue to press the offer--through meetings starting next week with potential partners in the deal, WorldCom's bondholders and bankers, and federal regulators.

IDT lawyers have already spoken to some major bondholders, who are "ecstatic" about the offer, Jonas said in an afternoon telephone conference.

IDT earlier this week sent Clinton, Miss.-based WorldCom a written offer estimated at $5.1 billion, to be paid over 2 1/2 years, for about a third of WorldCom, he said.

The three units involved are MCI Group, the nation's second-largest consumer long distance provider; MFS, which provides local, long distance and Internet service to businesses; and Brooks Fiber, which provides local telecom services, primarily to businesses and government.

Under the offer, WorldCom would receive $800 million in IDT stock as soon as an agreement is reached, then would receive the cash flow generated by the businesses after six months, estimated at $800 million to $900 million, and in each of the two years after that. IDT estimates the final two payments would be about $1.7 billion each, but could be higher if the businesses grow.

Jonas said a deal would have to be completed soon, before the businesses lose all their value.

"There are dramatic customer losses going on," he said. "There are large-scale defections of the most talented employees of MCI, MFS and Brooks," along with poaching by competitors.

WorldCom spokeswoman Julie Moore said Friday that the company would not comment.

While WorldCom paid about $52 billion for the three businesses just a few years ago, Jonas said all of WorldCom is now worth only about $4 billion, based on its extremely low bond price.

"The creditors will do much better [with this plan than they will if things stay in their current hands," Jonas said.

WorldCom has insisted it does not expect to start selling off its core assets amid the $4 billion accounting scandal that has sent the company spiraling toward bankruptcy.

Yet Jonas said WorldCom began shopping both MCI and MFS to it in the last several months.

IDT, the parent company of the Internet-based telephone service Net2Phone, had revenues of $1.4 billion in the four quarters ending in January, but lost a total of $396 million over that period. But Jonas stressed that IDT has no debt and about $1.2 billion in the bank.

IDT Corp. shares were up 20 cents, or 1.2 percent, to close at $16.70 in trading on the New York Stock Exchange.

Shares of WorldCom gained 3 cents to close at 25 cents on the Nasdaq Stock Market, which has begun proceedings to delist the stock. WorldCom has requested a hearing; the stock will continue to trade in the interim.

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