Investor FAQ

I haven't sold my shares; will I get anything for them?

Unfortunately, there is not much hope for stockholders to recoup lost investment. The WorldCom stock price has decreased over 98 % from it's high of $64.51 in June of 1999 to approximately 10 cents in July of 2002. In the event of a bankruptcy stockholders are last in line to receive any money and in most situations, stockholders get nothing.

What about dividends?

WorldCom will not pay the final $.60 dividend on its MCI Group tracking stock in light of the carrier's precarious financial health, saving the company $71 million. How much money have investors lost? Shareholders have watched more than $180 billion in stock value vanish. Bonds have dropped to cents on the dollar.

What happens to my MCI stock?

WorldCom recently attempted to dump the MCI tracking stock. It converted each MIC share into 1.36 shares of WorldCom stock. This will save the company $284 million per year. However, a US district court has blocked the conversion at the request of the SEC. WorldCom may be forced to set a new conversion ratio.

What will happen to my stock or bond if WorldCom Declares Bankruptcy?

During a typical Chapter 11 bankruptcy, bondholders stop receiving interest and principal payments and shareholders stop receiving dividends. Bondholders may receive new stock in exchange for bonds, new bonds, or a combination of stocks and bonds. Stockholders may be asked to send back their current stock in exchange for shares in the reorganized company. New shares may be fewer and worth less. The worst case is if stockholders' shares are declared worthless because the company is declared insolvent. The IRS can provide information about reporting worthless stock as a loss on income tax statements

How does Chapter 11 Bankruptcy Work?

The U.S. Trustee will appoint one or more committees to represent stockholders and creditors to work with the company to develop a reorganization plan. The plan is voted on by creditors, bondholders and stockholders, and then confirmed by the court. Even if they vote to reject the plan, the court can still approve the plan if it treats stockholders and creditors fairly. The plan must comply with Bankruptcy Code. Confirmation could take several months. Management continues to run daily operations but the court must approve significant business decisions.

Who Gets Paid first in Bankruptcy?

1. Secured Creditors- often the banks.
2. Unsecured Creditors- banks, suppliers and shareholders
3. Stockholders