WilTel Restructuring Complete

Williams Communications completes its financial restructuring and emerges from Chapter 11 bankruptcy under a new name. The backbone provider is also looking for a new chief executive officer.

by ISP-Planet Staff [October 18, 2002]

Williams Communications Group, Inc. completed its financial restructuring and emerged from Chapter 11 proceedings this week donning a new name with its revitalized balance sheet. The company that filed for bankruptcy in April in order to restructure about $7.2 billion in debt will now operate as WilTel Communications Group, Inc.

The Tulsa, Okla.-based transport solutions provider emerges from bankruptcy protection with a new $375 million credit facility and no other substantial debt obligations. Under the company's reorganization plan, existing shares of WCG stock (OTCBB: WCGRQ) have been cancelled. A federal judge approved the reorganization plan Sept. 30.

The new WilTel canceled existing shares of Williams Communications stock, and issued 50 million shares of WilTel stock. The new shares will trade on the Bulletin Board under the symbol "WTELV." Approximately 54 percent of which have been issued to unsecured creditors and 44 percent have been issued to Leucadia National Corporation (NYSE:LUK).

Stockholders, who have filed class-action lawsuits, can get up to two percent of WilTel equity plus any money a court may award, by pursuing claims against company officers' and directors' liability insurance.

The company was one of several telecommunications carriers to buckle under slumping demand, a glut of network capacity and stiff competition over the past 18 months. WilTel will focus growing its customer base and increasing sales momentum for its core offerings, which include carrier-class voice and data services.

But WilTel faces new challenges to its business plan as a reorganized company. It may have trouble attracting and retaining customers who have been spooked by the telecom industry's financial problems and accounting scandals. Industry insiders think that wary clients could be attracted to more established carriers, like AT&T or Sprint, rather than risk establishing a business relationship with a carrier emerging from bankruptcy.

Market challenges will need to be addressed by a new president and chief executive officer, since Howard Janzen resigned this week after seven years at the helm. Janzen, an engineer, led Williams Communications since its formation in 1995. Janzen piloted the company through its spinoff from energy colossus Williams Cos. in April 2001, and now through its bankruptcy reorganization.

In a statement released by WilTel's board, Janzen is credited with the company's quick financial turnaround.

"Howard is a major reason for the Company's rapid emergence from Chapter 11 and for the seamless management of operations and customer care since the company's founding and over these difficult past six months," WilTel said.

WilTel offers a comprehensive portfolio of network and broadband transport services to companies whose businesses require intensive amounts of bandwidth. These companies include the Regional Bell Operating Companies (RBOC) like SBC and Verizon, as well as major media content providers like Yahoo! WilTel's network connects over 100 cities and reaches five continents. The company operates an integrated fiber-optic network that utilizes advanced optical networking technologies, and next-generation switching and routing equipment to provide carriers-class Internet, data, voice and video services.

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