OzEmail confident despite WorldCom bankruptcy fears - News - Business

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This story was printed from ZDNet Australia.
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OzEmail confident despite WorldCom bankruptcy fears

By James Pearce, ZDNet Australia
May 13, 2002
URL: http://www.zdnet.com.au/news/business/soa/OzEmail-confident-despite-WorldCom-bankruptcy-fears/0,139023166,120265213,00.htm

Speculation is rife that WorldCom, the Telecommunications giant that owns OzEmail, could soon declare bankruptcy.

WorldCom acquired OzEmail in February 1999, as part of then-president and CEO Bernard Ebbers' empire-building strategy. Speculations are rife that the new WorldCom CEO John Sidgmore will sell OzEmail as part of mooted asset sales. Sidgmore has mentioned the possibility of asset sales, but noted that the core Asian network will be kept.

OzEmail spokesperson David Bathur declined to comment on the problems faced by WorldCom, but stated there are currently no plans to sell OzEmail. -We're profitable and we're in great shape," he said. -Acquisitions and customers migrating from failed ISPs have certainly resulted in significant spikes in growth."

Ratings firms slashed WorldCom's debt to "junk" status Thursday, raising the likelihood that the company will have to declare bankruptcy in order to restructure its business. While WorldCom, which could have US$32 billion in debt by the end of the year, has said its customers aren't defecting analysts say the company is bound to suffer as customers get nervous.

Analysts say the company's financing problems make bankruptcy a distinct possibility. Rick Grubbs, analyst at securities firm Credit Lyonnais Securities gives the odds of a bankruptcy at about 50 percent. "I don't think anyone will know that for sure until they do a complete asset review," he added, referring to the company's plan to try to sell off some of its assets to pay debt. The review is scheduled to take place over the next few months.

Tiffany Kary contributed to this article.