WorldCom, which yesterday was downgraded by Standard & Poor's to D, is expected to file for Chapter 11 protection as early as Monday and has nailed down $2 billion DIP facility via Citibank/Salomon Smith Barney, J.P. Morgan and GE Capital, sources said.
Exact pricing on the DIP loan was unavailable by press time, though, sources close to the loan noted that it will in the LIB+300-LIB+350 range, which is in line with pricing seen other large DIP loans, such as KMart.
WorldCom recently not only defaulted on one of its senior unsecured notes but also missed payments on the notes of subsidiary Intermedia Communications, adding credence to opinions that the company will be unable to avoid a bankruptcy filing.
The telecom company has been under increasing pressure to secure financing as it faces legal challenges from its investors, as well as from prominent lenders, which accused it of fraud when it drew down on its $2.5 billion, 364-day revolver in May.
A total of 25 lenders are involved in this legal challenge, including Deutsche Bank and ABN AMRO.
Clinton, Miss.-based WorldCom had about $30 billion of total debt outstanding as of March 31.
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