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Southern District of New York Bankruptcy Judge Arthur Gonzalez cleared WorldCom Inc. to borrow up to $1.1 billion in debtor-in-possession financing Tuesday. That’s just more than half the $2 billion the company thought it would need when it filed for bankruptcy protection in July. Marcia Goldstein of Weil, Gotshal and Manges, representing WorldCom, said that because of its improved cash position, WorldCom would not require that much. Referring to testimony from chief financial officer John Dubel, Goldstein said that WorldCom needs the funds to bolster the confidence of its vendors and customers and to receive $500 million in trade credits. Without approval of the DIP, Dubel testified, the company could face cash demands in excess of $1 billion. Citibank NA, JP Morgan Chase Bank and General Electric Capital Corp. are arranging the loan. Goldstein said that the company had lined up commitments for more than $1 billion. In all, 19 parties filed objections to the DIP. Most were settled before the hearing, and Gonzalez overruled the remaining handful. WorldCom’s lawyers were able to reach agreement with a group of investors in the company’s MCI Group subsidiary, which had sought protections for the subsidiary’s assets. Goldstein told the court that because MCI has the majority of WorldCom’s customers and vendors and is the largest user of the company’s cash, the subsidiary would benefit the most from the DIP. Two of the unresolved objections came from Cable & Wireless and Williams Communications Group Inc. Edward Dolan of Hogan & Hartson, representing both companies, made a “plea for information,” arguing that the company had not disclosed sufficient details regarding its finances to justify the loan and to grant all of the super priority liens that the banks sought. While the company has said that it has $1 billion in cash, Dolan said that without schedules, monthly operating reports and other information, it was difficult to interpret the significance of the sum. Dubel said that the July operating report would likely be filed this week. Separately, Goldstein said that the company had reached an agreement on its key employee retention program with Richard Breeden, the former Securities and Exchange Commission chairman appointed court monitor by U.S. District Judge Jed Rakoff, who is hearing the SEC’s civil fraud suit against WorldCom. Goldstein would not comment on the particulars of the employee plan, but said it would be filed in the coming days. Copyright �2002 TDD, LLC. All rights reserved.

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