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Bankrupt telecom WorldCom has shut down its wireless unit and made two appointments to guide it through the months ahead.
The company said on Monday that it had reached agreements to move its mobile phone customers to other service providers and by the end of September the loss-making mobile unit would be closed. AT&T Wireless Services, Verizon Wireless, Alltel Corp and a fourth, un-named carrier will take up WorldCom's customers.
The company's wireless unit functions as an MVNO (mobile virtual network operator), which means that it does not own a network. Instead the business buys airtime from other operators and re-sells it under its own brand. WorldCom claimed that through this business it was generating around USD1 billion in revenue annually from almost 2 million customers. Shutting the money-losing business will save WorldCom as much as USD700 million per year, the company said.
WorldCom said that it had completed the deal before it filed for bankruptcy, which means that the bankruptcy court overseeing the telecom's actions did not have to approve the agreements.
With regard to the company's bankruptcy proceedings, WorldCom made two new appointments to help guide it through the coming months. In a statement, WorldCom said that Gregory F. Rayburn will be the firm's new chief restructuring officer and that John S. Dubel will become the company's latest chief financial officer.
The two executives are both principals with AlixPartners LLC, a corporate-restructuring firm, and they will both report to Chief Executive Officer John Sidgmore. Dubel will now fill the shoes of former chief financial officer Scott Sullivan, who was fired last month after the company said it misreported USD3.85 billion in expenses over five quarters. That misrepresentation prompted the company to become the subject of an investigation by US regulators, who have charged it with fraud.
In their new roles, Rayburn and Dubel face the daunting task of negotiating with creditors and overseeing asset sales and will be expected to provide information to investors, regulators and other officials.
Rayburn has been with AlixPartners since August 2000 and most recently he worked as chief executive officer and chief restructuring officer at Sunterra Corp, WorldCom said. That company, a time-share operator, recently completed its restructuring after filing for Chapter 11 bankruptcy protection over two years ago. Rayburn is a certified public accountant and a certified fraud examiner.
Dubel, who joined AlixPartners this year, has served as chief restructuring officer and chief operating officer at CellNet Data Systems Inc. He is a certified insolvency and reorganization accountant, WorldCom said.
"These appointments are an important step in moving WorldCom forward," Sidgmore said in a statement. "In a short time, we have secured two of the most highly qualified and experienced restructuring executives available," he said. "Their task will be to support our efforts to emerge from reorganisation as quickly as possible with a healthy business focused on its core capabilities. During this process, WorldCom will continue to provide world-class services to our customers," Sidgmore added.
The appointments are subject to approval from the bankruptcy court.
In related news, selection begins on Monday in New York for a panel of as many as 15 people to who will steer WorldCom through the stages of its bankruptcy proceedings. It will be the committee's job to negotiate how much the company will pay creditors and will decide which attorneys, accountants and investment bankers are hired. Members of the committee will be chosen from among WorldCom's existing creditors.
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