WorldCom may file for bankruptcy protection as early as Monday, sources familiar with the situation have said.
A bankruptcy filing by WorldCom, which has $104 billion (Stg£65.7 billion pounds) in assets and transmits half the world's Internet traffic, would eclipse the Chapter 11 filing by collapsed energy trader Enron as the nation's largest insolvency.
A WorldCom spokesman declined to comment. Chief Executive Mr John Sidgmore said on July 9th a decision whether to pursue bankruptcy protection, or some other financial reorganisation, would be made within three weeks. The filing is expected early next week, the sources said.
Shares of WorldCom lost 1 cent to close at 9 cents on the Nasdaq market yesterday. WorldCom's once high-flying stock, which rocketed to $64 in 1999, had made it one of the darlings of the Wall Street bull market. Its swift drop epitomised the bombed-out telecom industry that crumbled under a glut of capacity, excess debt and accounting scandals.
The Clinton, Mississippi-based company, which has 85,000 employees and operations in 65 countries, has lined up about $2 billion in funding that would allow it to keep operating under a bankruptcy reorganisation, sources familiar with the situation told Reuters this week.
Citigroup, J.P. Morgan Chase & Co. and General Electric's GE Capital financing arm will provide the so-called debtor-in-possession funding, which will be backed by the value of WorldCom's high-speed Internet network and other assets, those sources said.