Williams Communications files for Chapter 11 after agreeing restructuring

New York, April 23 - Williams Communications Group, Inc. made a prepackaged Chapter 11 bankruptcy filing after agreeing a restructuring plan with its creditors. Under the proposal, unsecured creditors will receive all the equity of the reorganized company.

The Tulsa, Okla. communications company said the plan is supported by more than 90% of its bank lenders and by an ad hoc committee of bondholders.

The reorganization plan will reduce Williams' debt by about $6 billion.

Williams Communications filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York. Its operating subsidiary, Williams Communications, LLC, is not expected to be involved in the Chapter 11 reorganization process, the company said.

"After considering all options, it was determined that a Chapter 11 financial restructuring would be the best method to restructure the holding company's balance sheet while at the same time protecting the ability of Williams Communications to continue operations without interruption," said Howard Janzen, Williams Communications' chairman and chief executive officer, in a news release.

Williams Communications entered into a lock-up agreement with its bank lenders and bondholders under which these creditors will vote in favor of the reorganization plan. The lock-up runs until July 15, 2002 although it will automatically extend to Oct. 15, 2002, if the company files a plan of reorganization and has met certain other conditions.

Under the proposed restructuring, all unsecured claims will be converted into 100% of the common stock of the reorganized company.

Williams Communications will raise at least $150 million through additional debt or equity investment before approval of the plan of reorganization in order to help meet the company's commitment to prepay $450 million of its bank debt. Of this figure, $200 million was prepaid on execution of the lock-up agreement.

The Williams Cos., Inc., the company's third principal creditor and former parent, previously agreed not to oppose a plan of reorganization as long as certain conditions were met including treatment of certain of its unsecured claims in the same way as other unsecured claims against the company and not impairing its claims under certain service and lease agreements.

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