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Money > Reuters > Report June 29, 2002 | 1235 IST |
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IDT says to offer up to $4 billion for WorldCom unitTelephone services company IDT Corp. said on Friday it planned to offer $3 billion to $4 billion for WorldCom Inc.'s MFS Communications unit, which provides local telephone services to corporations. Newark, New Jersey-based IDT said it has been in informal talks to buy the unit from WorldCom, which faces likely bankruptcy after discovering a $3.85 billion accounting error. IDT Chairman Howard Jonas plans to meet next week with WorldCom Chief Executive John Sidgmore to discuss the offer, according to IDT spokesman Gil Nielsen. Exact terms of the offer were not disclosed. IDT, which has operations ranging from telephone calling cards to Internet-based telephone services, to fiber-optic networks, has a market capitalization of about $1.28 billion and more than $1.02 billion in cash on hand. WorldCom did not immediately return calls seeking comment. The Securities and Exchange Commission charged WorldCom, the No. 2 US long-distance telephone and data services company, with fraud, and two Congressional committees have demanded testimony and documents from company officials. Clinton, Mississippi-based WorldCom scrambled on Friday to secure more lenient terms on its existing credit pacts and secure new funding so it can make interest payments on its $30 billion in "junk"-rated debt. WorldCom, which acquired MFS in 1996 for $15.5 billion, has hired advisers to help it weigh its options and dispose of some non-core businesses to raise cash, sources familiar with the situation said. WorldCom said it aims to unload its Latin American assets, such as its investments in Brazil's Embratel and Mexico's Avantel, as well as its wireless resale business, but analysts see those secondary assets as difficult to sell in the weak economy. WorldCom's most-prized units -- the MFS local telephone business and UUNet, which dominates the Internet and data transmission market Internet backbone --- would fetch high prices but are unlikely to be sold unless the company is forced to liquidate in bankruptcy, analysts said. IDT recently acquired Winstar Communications, a bankrupt telecom company that uses fixed-wireless technology to transmits voice and data services through the air. ALSO READ:
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