Williams snags Leucadia investment

By Susan Rush
from CED Broadband Direct, July 29, 2002

Williams Communications Group Inc. inched closed to emerging from Chapter 11 with a multi-million dollar investment from Leucadia National Corp.

The deal calls for Leucadia to make a $150 million investment to help Williams repay mounting bank debt. Leucadia also will fork over $180 million for Williams' former parent Williams Companies' rights in Williams Communications Group.

If approved by a federal bankruptcy court, the plan will enable Williams to emerge from bankruptcy protection in October. The investment will give Leucadia a 45 percent stake in the emerged company. The remaining 55 percent stake will be held by bondholders. Current shareholders will get the shaft, since the deal wipes out shareholder value.

Last week, Level 3 Communications reportedly made a $1.1 billion bid for Williams swirling up speculation that the bid might impede the Leucadia deal.

Williams filed for bankruptcy protection from its creditors in April.

In the just-ended second quarter, Williams posted an unaudited net loss of $349.1 million, or 68 cents per share. In the same quarter last year, the company recorded net income of $339.5 million, or 69 cents per share. The 2002 results are consistent with earnings guidance Williams provided on July 22.