Feb, 2002 : Williams Considers Chapter 11 Reorganization
📅 - Williams Communications Group Inc.said Monday it may reorganize under Chapter 11bankruptcy protection, as the struggling telecommunications company developsa plan to restructure its balance sheet and reduce its $975 million debt.
Earlier in the month, Williams said that bank lenders warned it may be indefault on a credit agreement, although the company has disputed the claim.
"Williams Communications continues to have a productive dialogue with itsbanks," chairman and CEO Howard Janzen said Monday. "As previously stated,we believe the company has sufficient cash - over $1 billion as of Dec. 31,2001 - to fund our business plan through 2003. In addition, we are currenton all of our obligations."
But the company also said Friday that "certain institutions other than thebanks are not likely to participate in the restructuring process on termsthat are beneficial to all stakeholders of the company." A Chapter 11reorganization, the company claims, would allow business to continueuninterrupted while minimizing the impact of restructuring to customers andvendors.
The restructuring would probably mean cutting jobs by 25 percent, as part ofcutting its "controllable" cost structure by a quarter, the Tulsa,Okla.-based company said.
The announcement came just after the company projected a first-quarterrevenue range of $328 million to $347 million, a 20 percent growth over lastyear. The telecommunications industry continues to struggle with a severedownturn; Global Crossing Ltd. is now in its second month of bankruptcy, andother companies are experiencing reduced demand for fiber-optic capacity.
New York Stock Exchange-listed shares of Williams Communications plunged 29cents, or 57%, to 22 cents at 4 p.m. EST following the announcement. Thestock traded at more than $18 a share a year earlier.
Earlier in the month, Williams said that bank lenders warned it may be indefault on a credit agreement, although the company has disputed the claim.
"Williams Communications continues to have a productive dialogue with itsbanks," chairman and CEO Howard Janzen said Monday. "As previously stated,we believe the company has sufficient cash - over $1 billion as of Dec. 31,2001 - to fund our business plan through 2003. In addition, we are currenton all of our obligations."
But the company also said Friday that "certain institutions other than thebanks are not likely to participate in the restructuring process on termsthat are beneficial to all stakeholders of the company." A Chapter 11reorganization, the company claims, would allow business to continueuninterrupted while minimizing the impact of restructuring to customers andvendors.
The restructuring would probably mean cutting jobs by 25 percent, as part ofcutting its "controllable" cost structure by a quarter, the Tulsa,Okla.-based company said.
The announcement came just after the company projected a first-quarterrevenue range of $328 million to $347 million, a 20 percent growth over lastyear. The telecommunications industry continues to struggle with a severedownturn; Global Crossing Ltd. is now in its second month of bankruptcy, andother companies are experiencing reduced demand for fiber-optic capacity.
New York Stock Exchange-listed shares of Williams Communications plunged 29cents, or 57%, to 22 cents at 4 p.m. EST following the announcement. Thestock traded at more than $18 a share a year earlier.
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