Williams Communications gains customers, boosts revenues amid banker concerns

Monday, February 4th 2002, 12:00 am

By: News On 6

TULSA, Okla. (AP) _ News of declining quarterly losses, more customers and higher revenue at Williams Communications Group was tempered Monday by uncertainty over its relationship with creditors.

Tulsa-based Williams Communications said in its preliminary quarterly earnings release that a bank group that has lent $975 million was considering whether the company was in default on a credit agreement.

But Chief Executive Howard Janzen said his company has met its credit conditions and has not defaulted on any obligations. It doesn't plan to, he said.

``We have never been late on a payment,'' Janzen said.

He said executives will offer a restructuring plan by Feb. 25 to shore up the company's balance sheet. The banking conglomerate includes about 45 major lenders.

Williams Communications does not plan to file for Chapter 11 bankruptcy protection, Janzen said. A chief rival, Global Crossing, recently filed for federal protection from creditors.

``If we are successful with the current plan, it would not involve declaring bankruptcy and it would not involve a significant dilution for equity holders,'' he said without divulging more.

The Tulsa-based company operates a 33,000-mile fiber optic network that transmits video, voice and data signals for long distance carriers, Internet providers and television networks.

Its industry has been shunned by investors concerned about whether companies that have spent billions to build their networks can become profitable and pay their debts.

Williams Communications reported a fourth quarter loss of $372 million, or 76 cents per common share. But that compared with $547 million for the period a year earlier. Losses for the year were $1.2 billion, or $2.47 per common share.

Company stocks fell almost 30 percent Monday, closing at $1.

The preliminary earnings report did not include possible impairments charges the company might have to take because of bankruptcies in the industry, the company said. Changes would be filed in the company's 10-K report to the Securities and Exchange Commission, due March 31.

Janzen said his company is meeting expectations and that the net losses reflect higher depreciation and operating costs as it continues to load customers onto its network, which was completed last year.

Williams Communications saw its 16th straight quarter of growth of network revenue growth.

Network revenues were $302.8 million, a 12 percent increase over the third quarter and 36 percent over the fourth quarter of 2000.

Consolidated revenues rose $330.3 million, up 11 percent over the third quarter. The company added 20 percent more customers, bringing the number to 353.

Moody's, Standard & Poors and Fitch recently downgraded Williams Communications debt over concerns that the company will meet its financial goals. The move alerts investors of what the ratings firms consider a greater risk of owning bonds and other debt securities of the company.

The company is relying on interim financing until it can generate enough money from operations to meet all its obligations. It expects to have positive cash flow by the end of next year.

Cash on hand of just over $1 billion is expected to meet expenses in the coming year. The company has debt of about $5.16 billion with annual interest expense of $525 million.

The company incurred a $12.8 million quarterly operating loss, before the net loss was calculated by deducting interest, taxes and required accounting charges that reflect the reduced value of assets.

But on an ongoing basis, the company before the quarter ended achieved positive operating earnings before the required deductions. Janzen said the development was a milestone for the business.