MCI Agrees To Pay Another $250 Million In Stock To Fraud Victims


MCI said Monday that it reached a settlement with the Securities and Exchange Commission in which it agreed to pay another $250 million in stock to WorldCom shareholders.

The amount is in addition to the $500 million in cash that MCI, formerly WorldCom, was ordered by the SEC in May to pay fraud victims.

MCI CFO Bob Blakely said the settlement was another positive step toward emergence from bankruptcy.

"Today's settlement reflects an additional contribution of $250 million in common stock that will allow shareholders and bondholders to participate in the future success of the company," he said in a statement.

"We appreciate the efforts of everyone involved in reaching this decision, which remains subject to court approval," he said. "We believe that it is another significant step toward MCI's emergence from Chapter 11 expected this fall."

The SEC brought civil fraud charges against MCI for misstating $11 billion in revenue. Originally, the SEC wanted MCI to pay $1.5 billion, but the commission approved a $500 million amount in May as a result of the carrier's pending bankruptcy case.

MCI's reorganization plan is pending approval by its creditors. If approved, the company expects to emerge from bankruptcy by September or October, CEO Michael Capellas said earlier.

The carrier expects to have significantly less debt, in the range of $4.5 billion to $5.1 billion, compared with the $30 billion in debt it claimed upon filing for Chapter 11 protection last July.

MCI also expects to exit bankruptcy with about $1 billion in cash on hand and $350 million in capital leases.