WorldCom swallows poison pill, lets see what happens, get an idea just in case we need to do it, who knows?
WorldCom adopts rights plan with 15 pct trigger
CLINTON, Miss. March 8 (Reuters) - Telecommunications service provider WorldCom Inc. <WCOM.O>, reeling from watching its stock price fall by half the last six weeks, on Friday said it would adopt a shareholder rights plan to guard against "undervalued or unfair takeovers."
The rights plan, which effectively makes hostile or unsolicited takeover attempts inordinately expensive and difficult, would be triggered if any investor acquires 15 percent or more of WorldCom's outstanding shares.
WorldCom's said it was not currently aware of any attempt to acquire the Clinton, Mississippi-based company, but the rights plan adoption is symbolic of the firm's dramatic fall from grace over the last six months.
After having its first business plan sketched on a restaurant napkin by Chief Executive Bernie Ebbers in 1983, WorldCom became one of the country's most acquisitive companies and eventually grew into the No. 2 U.S. long-distance voice and data services company.
But recently, WorldCom has struggled with slowing revenue growth as business and residential customers slashed spending in the weak economy. Price wars, excess capacity of high-speed networks, and competition from the Baby Bells and wireless telephones added to its woes.
Investors' concerns that WorldCom may might follow other telecom companies, such as rival Global Crossing Ltd. <GBLXQ.PK>, into bankruptcy also slammed its stock price, leaving it vulnerable to an unwanted takeover bid.
"The Board of Directors determined that this Shareholder Rights Plan is an effective and reasonable method to safeguard the interests of our shareholders," said Ebbers, who has staunchly defended WorldCom's's balance sheet.
"We want to ensure that the future benefits of current programs and initiatives cannot be denied to shareholders by an opportunistic, undervalued acquisition of the Company," Ebbers said in a prepared statement.
Last year WorldCom restructured and created two tracking stocks. Shares of WorldCom Group <WCOM.O> track the company's main data, corporate telephone and international businesses, while MCI Group <MCIT.O> shares follow the residential long-distance telephone operations and dial-up Internet operation.
The rights plan calls for a dividend distribution of one preferred stock purchase right for each outstanding share of WorldCom Group stock and MCI Group stock. The dividend will be made to shareholders of record on March 18.
The rights will expire on March 18, 2012, unless earlier terminated or redeemed.
Investors reacted positively to the plan, sending shares of WorldCom Group up 79 cents, or 9.4 percent, to close at $9.19 on the Nasdaq market. Shares of MCI Group jumped 95 cents, or 10.75 percent, to close at $9.79, also on Nasdaq.
17:40 03-08-02
If you don't have the time to do something right, where are you going to find the time to fix it?
-Stephen King
