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Verizon May Reduce the Price It's Paying for MCI

IN BRIEF / TELECOM

August 16, 2005|From Bloomberg News

Verizon Communications Inc. said it might cut its $8.46-billion purchase price for MCI Inc. by as much as $69.2 million if MCI's liabilities rise above an agreed-on amount.

If MCI spends more than $1.78 billion to settle bankruptcy claims and tax liabilities from Jan. 1 to when the merger closes, the purchase price will fall as much as 21 cents a share, New York-based Verizon said in a filing with the Securities and Exchange Commission. MCI estimated that those costs would be $1.62 billion to $1.85 billion.

Verizon is buying No. 2 long-distance provider MCI for $26 a share to add corporate clients and more than double its share of the telecommunications market for big companies. U.S. taxes may be as much as $753 million, though Ashburn, Va.-based MCI expects that most of the liability won't be incurred before the merger and might be as little as $585 million.

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