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JMG Capital files emergency motion to convert WorldCom preferred stock
By Jeff Pines
Washington, Feb. 12 - Worried that the window is closing for getting any money out of its WorldCom, Inc. preferred stock, a group led by JMG Capital Partners LP filed an emergency motion on Feb. 11 with the U.S. Bankruptcy Court to compel WorldCom to convert its preferred shares to common stock.
The JMG group owns more than 8 million shares of three series of WorldCom's preferred stock, all of which are convertible into common stock. The group believes that if it can get the shares converted "there still exists a brief opportunity for them to sell the common stock and realize at least some meaningful value."
On Jan. 21, WorldCom's stock was trading at about 0.0385 cents per share. On Feb. 5 the price dropped to 0.027 cents per share.
Under WorldCom's proposed reorganization plan, all equity shares will become worthless.
JMG has been asking WorldCom, now called MCI, to convert the shares periodically since July 2002, which was when the company filed for Chapter 11, but all of its requests were "ignored, rebuffed or refused" by WorldCom, or its transfer agent, the Bank of New York.
Last month, the group started contacting WorldCom's investor relations department again to have their preferred shares converted.
JMG is concerned that WorldCom does not have enough common shares to convert the preferred shares.
"Notably, and because WorldCom's books and records are apparently in a state of disarray, the debtor does not even know how many of its shares of common stock are issued and available to satisfy a conversion request at this time," the group said in its motion.
Prospect News contacted MCI for comment, but the company was not able to respond by press time.
The company's Chapter 11 case number is 02-13533. A hearing is scheduled for Feb. 26in the U.S. Bankruptcy Court for the Southern District of New York.
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