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With Bankruptcy Over, MCI Searches for Buyer

The long-distance giant, which hopes to fetch more than $6 billion, is pondering whether to sell itself in parts.

September 21, 2004|From Reuters

MCI Inc., which emerged from bankruptcy protection in April, has begun to search for a buyer, sources familiar with the situation said Monday.

MCI, which has seen price wars and competition erode its sales to business and residential customers, declined to comment.

The company said in August that it would review the value of its assets. MCI's current market capitalization is about $5.6 billion.

The No. 2 U.S. long-distance telephone and data services company has hired J.P. Morgan Chase & Co., in addition to Lazard Freres & Co., which served as its financial advisor during its restructuring, the sources said. The banks declined to comment.

The New York Times said MCI also tapped Greenhill & Co. and law firm Davis Polk & Wardwell to help canvass for buyers.

MCI hopes to fetch more than $6 billion, according to the newspaper.

MCI and rival AT&T Corp. have been slammed by competition from Baby Bell local telephone companies that have pushed into the long-distance market with discounted packages of services.

Although MCI's shrinking sales and bleak growth outlook may make it difficult to find a buyer, it boasts a lucrative base of corporate customers and a global high-speed Internet network that could allow a Baby Bell to quickly leapfrog competitors, analysts have said.

MCI and its advisors are considering whether to try to sell the company whole or to sell it in parts by splitting its more attractive business services unit from its floundering consumer business, the New York Times reported.

The company, formerly known as WorldCom Inc., sought Chapter 11 bankruptcy protection in July 2002, buckling under the weight of $41 billion in debt and an accounting scandal. Several senior executives later faced multiple fraud charges.

The Securities and Exchange Commission is probing a former member of the creditors' committee that oversaw the company's emergence from bankruptcy.

MCI shares closed up 8 cents at $17.28 on Nasdaq.

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