The telecom giant WorldCom is optimistc that new funding proposals will be finalised this week as the company moves to restore confidence and avert possible bankruptcy. The company is embroiled in a $3.85 billion accounting scandal.
Worldcom’s network which carries about half of the world's Internet traffic, said none of its major customers have canceled contracts and foresees no threat of being shut down.
WorldCom, which has about $2 billion in cash on its books, did not rule out the possibility of bankruptcy, but said its fate remained in the hands of its banks, which have not yet demanded the company immediately repay any of its $30 billion debt.
"We are working with banks even as we speak here, talking about various proposals to restructure [company finances]. And we are somewhat optimistic that we will get a proposal, if not two proposals, in hand this week to accomplish that," chief executive officer Mr John Sidgmore said.
The company is in talks for $5 billion in new funding, sources said. The funding package would replace $2.65 billion in credit it recently drew down, and a $1.6 billion credit line that expires in 2006, and provide about $750,000 to $1 billion of additional credit, sources said.
"We believe that if we get the extra billion of new money, which makes up the critical piece of the $5 billion package .... we can make it through a long period of time with that cash and the cash we have on hand now," Mr Sidgmore said.
The company said it has enough cash to meet its near-term expenses, but it may be hard-pressed to meet a $2 billion debt payment in January.
WorldCom executives have also met with US Securities and Exchange Commission Chairman Mr Harvey Pitt after the agency blasted as "wholly inadequate and incomplete" a report WorldCom filed on Monday summarising its accounting problems.
WorldCom, which has been charged by regulators with fraud, said accounting problems could extend as far back as 1999 and 2000, but the nature and extent of any problems remained unclear. It hired an outside expert to investigate the problem, and faces scrutiny by two Congressional committees.
"There remain many open questions, and quite a bit of speculation as to exactly what occurred ... We will release everything we know when we know it," Mr Sidgmore said.
Shares of WorldCom Group, the company's main data and Internet unit, closed up 4 cents, or 67 per cent yesterday. WorldCom has appealed Nasdaq's plan to delist the company's two tracking stocks, a move scheduled for Friday.