Verizon may pay up to $0.21 less per share for telecom rival MCI because of MCI liabilities, according to a document Verizon filed with the U.S. Securities and Exchange Commission Monday.

Verizon offered MCI $26 per share in a May bid accepted by MCI's board, in a deal worth about $8.4 billion. But the merger agreement allowed for adjustments if MCI's liabilities exceeded $1.775 billion at the time of the merger. MCI now estimates that its premerger liabilities, including bankruptcy claims against it and cash spent during 2005, will be between $1.615 billion and $1.845 billion.

MCI, formerly known as WorldCom, emerged from bankruptcy in April 2004.

Verizon's May bid, which MCI favored over a higher bid from Qwest, consisted of $5.60 per MCI share in cash, and either 0.5743 Verizon shares or shares worth $20.40, whichever is greater.

Verizon, in its Monday SEC filing, noted that it has not yet reviewed MCI's liability estimates.

If the liabilities exceed $1.775 billion, Verizon can ask for an adjustment, and if the two sides disagree on the amount of the adjustment, the two companies can enter into arbitration as outlined in the merger agreement. "In order for Verizon to prepare an estimate, it will need to perform detailed analyses and evaluation of the facts and circumstances related to numerous complex bankruptcy claims and domestic and international tax matters," Verizon said in the filing. "This process is likely to be highly fact intensive."

The two companies will "use their best efforts" to come up with an agreeable number, Verizon added. A Verizon spokesman wasn't immediately available for comment Tuesday.

The procedures are in place for setting a final price, said MCI spokesman Peter Lucht. "This is yet another step in a timely merger process," he added.

The IDG News Service is a Network World affiliate.