WorldCom's bank debt was said to have weakened a touch last week even as the company announced that it had reached a settlement with the Securities and Exchange Commission for a civil penalty for past accounting practices. The levels were quoted in the 271/2 281/2 range. No trades could be confirmed as traders still maintain that there are few sellers of WorldCom bank debt. The bank debt is quoted about 3/4 to a point lower than the bonds.
The $500 million settlement with the SEC will not affect the distributions that have already been allotted to creditors under the company's current reorganization plan, but the settlement will be a part of distributions made as the company emerges from bankruptcy, according to a banker familiar with the deal. A new disclosure statement with updated information is expected to be filed soon. According to the company's initial plan of reorganization, senior lenders can expect to receive about 35.9 cents for each dollar of their claim. But due to limitations on the amount of new notes that will be issued, lenders may receive more or less of their distribution in equity. According to reports, a hearing for the confirmation of the plan could be held as early as August. Calls to company officials were not returned by press time.