WorldCom receives agreement for $2 billion DIP and secures $750 million commitment

By Sara Rosenberg

New York, July 22 - WorldCom Inc. obtained an agreement for up to $2 billion in debtor-in-possession financing with a $250 million letter of credit sub-limit - and has already secured a commitment of $750 million from Citibank, JPMorgan Chase Bank and General Electric Capital Corp. The facility is subject to court approval.

Lead banks on the $2 billion DIP include: Citicorp USA as administrative agent, Citibank as initial L/C issuer, J.P. Morgan Securities Inc. as syndication agent, joint lead arranger and joint bookrunner, General Electric Capital Corp. as documentation agent and collateral monitoring agent, General Electric Capital Markets Groups joint lead arranger and Salomon Smith Barney as joint lead arranger and joint bookrunner, according to a court filing.

The DIP, which is expected to consist of a term loan portion and a revolver with sizes determined upon syndication, will have an interest rate of Libor plus 350 basis points, the filing said. Fees for letters of credit are 3.50%.

Proceeds will be used to refinance the receivables facility and to provide financing for working capital needs, letters of credit, capital expenditures and other general corporate purposes.

Security is a first priority lien on all unencumbered assets of the company, the court filing said.

The Clinton, Miss. telecommunications company filed for Chapter 11 bankruptcy protection on July 21.

"Chapter 11 enables us to create the greatest possible value for our creditors, preserve jobs for our employees, continue to deliver top-quality service to our customers and maintain our role in America's national security," said John Sidgmore, president and chief executive officer, in a company press release. "We will use this time under reorganization to regain our financial health and focus, while operating with the highest integrity. We will emerge from Chapter 11 as quickly as possible and with our competitive spirit intact."

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