Securities Department to investigating Tulsa company's collapse

Saturday, April 27th 2002, 12:00 am
By: News On 6

OKLAHOMA CITY (AP) _ Williams Communications officials are not surprised the Oklahoma Securities Department is looking into its financial collapse and said they would cooperate fully with the investigation.

The agency announced Friday it would be scrutinizing Williams Communications, which filed for Chapter 11 bankruptcy earlier this week, and the broadband wholesaler's former parent company, Williams Cos. Both are based in Tulsa.

``It's not unexpected when a company files for bankruptcy for the Department of Securities to initiate this type of action,'' said Cheena Pazzo, a spokeswoman for Williams Communications.

Williams Communications reached a deal late Monday that splits its remaining equity between bondholders and Williams Cos.

At the time of the spin-off, the stock _ which once commanded $60 a share _ traded for about $4 and represented more than $2 billion of shareholder wealth.

When the company expects to emerge from court protection in four months, about 490 million shares of Williams stock will become worthless. That has prompted outcries from shareholders, who formed a committee and hired an attorney to represent their interests in bankruptcy court.

Phil Redman, one of the shareholders, said he approved of the government's involvement.

``I'm delighted to see that an official governmental body has taken an interest into what many shareholders believe is a case of outright fraud,'' Redman said.

Some shareholders have accused Williams Cos. of conspiring to regain control of Williams Communications, minus its debt, at the expense of common shareholders.

Williams Cos. spokesman Jim Gipson said the shareholders' claims have no basis in fact. He said he understands their anger, but not their rationale.

``A lot of people today want to become revisionists of history, but we didn't have the knowledge in April 2001 (at the time of the spin-off) that we have today.

``What conspiracy took all the other broadband companies into bankruptcy?''

Williams Communications followed telecom rivals Global Crossing and 360networks into bankruptcy after borrowing heavily to build vast fiber-optic networks. The building resulted in a perceived oversupply of broadband and rock-bottom prices, which made it difficult for Williams and its competitors to raise enough cash to pay creditors.

Some Williams Communications shareholders accuse the company's chief executive, Howard Janzen, of misleading them with rosy promises he couldn't keep.

``It's a great company. It's got real value,'' New Orleans shareholder Weldon Crawford said. ``For Williams to get half the company back for free is kind of weird.

``It's something the bankruptcy court _ and the government _ needs to take a hard look at.''