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Williams Communications
Company Description
WilTel Communications Group Inc. (formerly Williams Communications
Group) (“WCG” or the “Company”) offers
data, voice and media transport services over its fiber-optic
network to customers that include Regional Bell Operating
Companies, Interexchange Carriers, international carriers,
wireless companies, cable service providers, major Internet
service providers and media content owners.
Situation Overview
After its spin-off from former parent, The Williams Companies, WCG had difficulty in meeting its interest and principal obligations as the telecommunications sector experienced a steep downturn in demand and industry-wide overcapacity. Due to this operating environment and the lack of progress in negotiations with its secured lenders, the Company considered various alternatives for a financial restructuring of its $5.8 billion of debt outstanding, including $975 million of bank debt, $2.4 billion of unsecured claims of The Williams Companies, and $2.4 billion of Senior Notes. Blackstone was hired as the Company’s financial advisor to assist in this restructuring.
Transaction Summary
With Blackstone’s assistance, WCG consummated one of
the fastest, most comprehensive and successful restructurings
to date in the telecommunications industry. By keeping WCG’s
operating entity out of bankruptcy, the restructuring was
completed with limited disruption to the Company’s business.
- Blackstone assisted WCG in developing a detailed business
plan, demonstrating the Company’s future performance
by its individual product lines. Blackstone also developed
models and debt capacity and valuation analysis models,
with which Blackstone developed various restructuring alternatives
for the Company
- Blackstone coordinated all interactions among financial
advisors, bondholders, banks, new investors and senior management
and negotiated on behalf of WCG, culminating in a Restructuring
Agreement and a “pre-arranged” bankruptcy filing
with support of over 90% of its bank lenders and holders
of more than $875 million of its Senior Notes
- As part of the Restructuring Agreement, Blackstone initiated
a capital raising effort, contacting potential investors
and coordinating all interactions between interested parties
and the Company. As a result, Leucadia National Corporation
invested $150 million and purchased the unsecured claims
of The Williams Companies for an additional $180 million,
further facilitating a comprehensive solution to the transaction.
In return for its investment and acquisition of these claims,
Leucadia received 44% of the equity of the reorganized company,
with existing unsecured creditors owning the remainder
- On September 30, 2002 WCG emerged from bankruptcy with
$575 million of debt, down from $5.8 billion, after which
the Company changed its name from Williams Communications
to WilTel Communications
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