A committee of 15 WorldCom investors with over $8 billion in the company's bonds has formed a committee and tapped Houlihan Lokey Howard & Zukin last Wednesday to serve as its financial advisor in negotiations with the scandal-ridden telecommunications company. The committee hopes to unite with two other groups of investors that own the bonds of WorldCom's subsidiaries: MCI and Intermedia to give it more clout. Jeffrey Werbalowsky, senior managing director and co-head of Houlihan Lokey's financial restructuring group, acknowledged that his firm is advising what he called an "informal" group of WorldCom bondholders, but declined further comment. A WorldCom bankruptcy was widely viewed as imminent at press time. Jim Millstein, managing director at Lazard Frères, which is advising WorldCom, declined comment.
All of the committee members are believed to own at least $250 million in WorldCom bonds. They say Q Investments, a Fort Worth, Texas money manager, and Angelo Gordon, a $9 billion New York investor, are two of the firms on the committee. Daniel Golden, head of the restructuring group at Akin, Gump, Strauss, Hauer & Feld and the lawyer for the committee, did not return calls. Geoffrey Raynor, managing partner at Q Investments, and Jeff Aronson, a senior executive at Angelo Gordon, did not return calls.
The MCI and Intermedia bondholder committees have not appointed financial advisors and their plans could not be determined.David Rosner, a partner at Kasowitz, Benson, Torres & Friedman and the attorney representing the MCI bondholders, did not return calls, nor did Alan Kornberg, partner at Paul, Weiss, Rifkind, Wharton & Garrison. Kornberg is the attorney representing the Intermedia bondholders.
Once WorldCom files for bankruptcy, the U.S. Trustee office of the Justice Department will determine the composition of the creditor committee or committees from the bank lenders, vendors and bondholders. One restructuring guru says Carolyn Schwartz, U.S. trustee, has a history of allowing only one creditor committee, as she did in the case of Adelphia Communications. The bondholders are the largest creditor group, representing some $30 billion of WorldCom's $36 billion in outstanding debt.