WorldCom Secures DIP Financing

Worldcom Inc. has secured $2 billion in funding of which the telecommunications giant could tap to operate under a bankruptcy filing, and a consortium of banks moved closer today to an agreement that could cut the embattled company off from part of a $2.65 billion loan, according to national news organizations including Reuters and The Washington Post.

Citigroup Inc., J.P. Morgan Chase & Co. and GE Capital will provide debtor-in-possession financing to Clinton, Miss.-based WorldCom.

Meanwhile, it has been reported a consortium of banks are close to an agreement that would block part of a loan granted to WorldCom. A judge would have to approve the deal.

WorldCom has fallen out of favor with investors for months as the telecom sector imploded. But the carrier’s problems deepened last month after it disclosed improperly booking for expenses during the past five quarters in an accounting method that allowed the company to elude losses.

If the company files for Chapter 11 bankruptcy protection –- a move that appears likely –- it would represent the largest insolvency case in U.S. history.

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