Williams Communications Stockholder Web Site
April 30, 2002 Letter from Neal Nelson to Pam Lustrin
April 30, 2002
Attention: Pam Lustrin
Office of United States Trustee
33 Whitehall Street
New York, N.Y. 10004
I am writing on behalf of a group of over 4 thousand concerned
stockholders of Williams Communications.
The U.S. Trustee Mission statement says that the Trustee "acts
in the public interest ..." to "preserve the integrity of the
bankruptcy system", "secure the just ... resolution of bankruptcy
cases" and that the Trustee "identifies and investigates ... abuse".
Over the past few weeks, Williams Communications management
has taken a number of bizarre steps. Many stockholders feel that
the most recent step, filing for a Chapter 11 bankruptcy with
a pre-packaged plan where ownership of the company is taken away
from the stockholders and given to the bondholders, will be an
abuse of the bankruptcy process.
By way of background, the company's management reports, until just
recently, were consistently up beat. Assets exceeded liabilities
by 50%, steady growth in sales, they were meeting all targets, etc.
In January of this year the company started a "routine debt
restructuring" process. Reports were still generally favorable.
Meetings between management and the bondholders were secret but
the stockholders were assured that everything was going to be o.k.
On April 1st the company filed a 10k where they announced a
devaluation of company assets and a write off of 2.9 billion
dollars. At this point assets about equaled liabilities but
the company still had 1 billion in cash to work with.
Shortly after the 2.9 billion write off, the former parent
company of this business, Williams Companies, (the IPO was only
about a year ago), announced that they felt they were owed
2.5 billion dollars for various reasons. Williams Communications
management accepted this claim without dispute. At this point
liabilities exceeded assets.
Finally on April 22, 2002 the company announced a Chapter 11
filing with the pre-packaged deal where the former parent would
get 48% of newly issued stock and the bondholders would get the
remaining 52%. The existing stockholders would get nothing.
In a mere 21 days, the situation went from "routine debt
restructuring" to a pre-negotiated deal where the bankruptcy court
will be asked to approve, on a fast track basis, the agreement
that takes the company's assets and gives them to the bondholders.
None of the key events, the write down, or the new claims from
Williams Companies, have been subjected to external review. The
company management has refused repeated, formal requests for
meaningful dialog with stockholders. The Williams Communications
board has refused to act on written requests for action that were
passed by the stockholders with a 95% approval margin.
Evidence is mounting that management, the former parent and
bondholders have conspired to use the bankruptcy process to
unjustly take the assets of this company.
If the Trustee's office accepts the recent transactions without
review, and uses these transactions as justification for a finding
that "liabilities exceed assets, so therefore the estate should not
waste money on an equity holders committee" the office of the
Trustee may become an unwitting participant in the possible
conspiracy to defraud the stockholders. This is hardly consistent
with the Trustee's mission statement.
Please recommend to the Trustee that an equity holders committee be
appointed in the Williams Communications bankruptcy case.
Neal Nelson, Spokesperson
Committee of Independent Williams
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© 2002, Neal Nelson & Associates.