A U.S. court has given bankrupt telecommunication carrier WorldCom Inc. approval for an interim financing plan that should ensure the company continues operations and is able to pay staff, WorldCom said in a statement late Monday.
The U.S. Bankruptcy Court in the Southern District of New York approved the US$750 million plan a day after the carrier collapsed under the weight of debts that are estimated at $32.8 billion. On Sunday, it filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, which is designed to allow companies to continue operating while a restructuring or rescue plan is worked out. The $750 million is part of a larger deal worked out with several major creditor banks and will be supplied by Citibank NA, JP Morgan Chase Bank and GE Capital Corp. A final hearing on the deal, a $2 billion debtor-in-possession (DIP) facility, is scheduled for Sept. 4.
Speaking earlier in the day John Sidgmore, president and chief executive officer of WorldCom, told a New York news conference the $750 million "will carry us throughout the rest of the year."
In addition, the court granted WorldCom several first-day motions intended to keep the company operating, including the payment of prepetition wages, salaries, medical, disability and vacation benefits. A further stay on the conversion of MCI group tracking stock into WorldCom common stock until order of the court was also granted, said WorldCom.
The court rulings were described by Sidgmore in the statement as a solid first step toward restoring the financial health of the company.