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Wil-Com may get buyout
2002-05-08
By Melissa Davis
The Oklahoman


Williams Communications Group Inc. shareholders - outraged over a bankruptcy plan that would render their stock worthless - felt a flicker of hope Wednesday when a previously snubbed suitor announced plans for a possible buyout.

The acquisition would provide some compensation for shareholders of Williams Communications, considered the most widely held stock in the company's home base of Tulsa.

One Tulsa shareholder said almost any deal is better than the one he faces.

“As shareholders, we latch onto any ray of hope,” said Phil Redman. “The deal sounds very interesting on the surface. But it's got a lot of caveats, a lot of so-called 'forward-looking statements.'”

GlobalAxxess Holdings, a privately held company in Little Rock, Ark., said it hopes to acquire all stock in Wil-Com in exchange for stock in its own company, then go public in two years.

GlobalAxxess describes itself as a consolidator of failing telecommunications companies and is one of the leading bidders on bankrupt telecom giant Global Crossing Inc. The company was the leading bidder on the assets of Viatel Inc., a bankrupt telecommunications company in Europe.

GlobalAxxess Chief Executive Karl Schwarz described the proposed acquisition of Williams Communications as a winning deal for everyone - except, possibly, another buyer offering much less. He also said Williams Communications would emerge as the driving power behind any large mix of consolidated companies.

“Even if we're successful in buying other companies, the core would be the team that's right there in Tulsa,” Schwarz said. “They've got 2,800 employees, and we wouldn't be laying them off. In fact, we'd be hiring some back.”

Williams Communications shareholders celebrated Wednesday's news, the first offering any hope of recovering $2 billion of shareholder wealth that existed a year ago.

“We're delighted to have people offering alternatives that include some compensation for shareholders,” said Neal Nelson, a spokesman for the Williams Communications Group Stockholders Committee.

Under the proposal, GlobalAxxess would trade one share of its own stock for every two shares of Williams Communications. It also would offer to pay Williams Communications' lenders $400 million - double the amount proposed under the company's Chapter 11 reorganization - as an initial paydown, Schwarz said. Creditors would still receive their compensation through equity, but less of it, he said.

Williams Cos. Inc. - Wil-Com's former parent and largest creditor - is poised to receive 48 percent of the stock in a reorganized Williams Communications. Wil-Com bondholders would receive the remaining 52 percent.

Under the proposed buyout, creditors and shareholders would share 21 percent of the stock in GlobalAxxess.

Schwarz said Williams Communications ignored a similar offer made by GlobalAxxess before the Wil-Com Chapter 11 filing last month. He said the company waited two weeks to telephone him and still failed to discuss his deal.

Neither Williams Communications nor its former parent offered comments Wednesday.

Schwarz said he realizes Williams Communications is attempting a “slam-dunk” bankruptcy within the next 30 to 60 days, but plans to fight it. He admitted, however, the battle could be tough.

“There's an uphill battle on every one of these cases,” he said.
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