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  • World Com: Presented To:-Prof. Mani Thomas Presented By: - Gagandeep Singh

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    Gaurav Gupta
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    WorldCom grew rapidly through acquisitions in the 1990s, accumulating over $41 billion in debt. The company filed for bankruptcy in 2002 after its CEO resigned amid revelations that $3.8 billion in expenses had been improperly recorded as capital investments. Key issues contributing to WorldCom's fall included its large acquisition-fueled growth strategy, $341 million in low-interest "sweetheart" loans to executives, and a lack of independent oversight due to close relationships between management and analysts.

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    Gag an Deep

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    WorldCom grew rapidly through acquisitions in the 1990s, accumulating over $41 billion in debt. The company filed for bankruptcy in 2002 after its CEO resigned amid revelations that $3.8 billion in expenses had been improperly recorded as capital investments. Key issues contributing to WorldCom's fall included its large acquisition-fueled growth strategy, $341 million in low-interest "sweetheart" loans to executives, and a lack of independent oversight due to close relationships between management and analysts.

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    17 views8 pages

    World Com: Presented To:-Prof. Mani Thomas Presented By: - Gagandeep Singh

    Uploaded by

    Gaurav Gupta
    WorldCom grew rapidly through acquisitions in the 1990s, accumulating over $41 billion in debt. The company filed for bankruptcy in 2002 after its CEO resigned amid revelations that $3.8 billion in expenses had been improperly recorded as capital investments. Key issues contributing to WorldCom's fall included its large acquisition-fueled growth strategy, $341 million in low-interest "sweetheart" loans to executives, and a lack of independent oversight due to close relationships between management and analysts.

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    WORLD COM

    Presented to:-
    Prof. Mani Thomas

    Presented by:-
    Gagandeep singh
    WorldCom
    ● 1983-idea was concieved
    ● 1999-Shares touched $64
    ● 2002-Ebbers resigned in may
    ● 2002-WorldCom filed for bankruptcy
    Three major issues in the fall of
    WorldCom
    ● Growth through acquisition
    ● The use of loans to senior executives
    ● Threats to corporate governance created
    by chumminess and lack of arm's-length
    dealing
    Growth Through Acquisition
    ● WorldCom spent $60 billion in the
    acquisition of 60 companies and
    accumulated $41 billion in debt
    ● Two significant acquisitions:-
    MFS Communications and MCI
    Communications
    M&A Managerial Challenges

    ● Integeration of new
    and old organisation
    ● Financial integration
    Sweetheart loans for senior
    Executives
    ● $341million in loans board granted to Ebbers
    ● Loans were lent at little more than 2%, lesser
    than the marginal rate of return
    Chummy Relationships
    ● There were a host of incredibly chummy
    relationships between WorldCom's
    management and Wall Street analysts
    ● For eg:- Arthur Andersen that endorsed
    many of the accounting irregularities that
    contributed to WorldCom's demise
    Thank You

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