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Senior Editor

Stockholder pushes for MCI boycott

Jul 03, 20034 mins
Financial Services IndustryNetworking

An angry WorldCom stockholder proposing a boycott of the telecommunications company has received more than 17,000 e-mail messages, including 7,000 in the past week, from supporters.

Neal Nelson wants the company, now doing business as MCI, to rewrite its bankruptcy plan in favor of stockholders. He has issued a series of press releases to publicize his boycott proposal.

Nelson, a Chicago Unix and Linux programmer, has been receiving about 1,000 e-mail messages a day this week from people saying they will boycott MCI because of a reorganization plan announced in April that Nelson describes as “unnecessarily harsh” to stockholders. Because of bankruptcy rules, banks and bondholders in the company will get most of the money in the reorganization, with stockholders getting nothing, Nelson complained in an interview.

“It’s a really sweet deal for the new management at MCI,” Nelson said of the reorganization plan. “It’s very cozy arrangement for bondholders right now.”

Nelson, who has also tried sending out spam to convert people to his cause, explains his objections at the MCI WorldCom Stockholders Group’s Web site. Nelson put up the Web site about a year ago to track MCI bankruptcy news and has been threatening the boycott since the beginning of May.

Instead of the company erasing about $36 billion in debt in the bankruptcy proceeding, the company should eliminate $20 billion, about half its debt, and leave some money for stockholders, Nelson said. Because of the lower debt, MCI will have an advantage over competitors like AT&T and Sprint, which are carrying larger debt loads, he added.

An MCI spokeswoman wouldn’t comment specifically on the bondholders versus stockholders issue in the reorganization. “Our restructuring plan has the support of 90% of the company’s creditors,” said spokeswoman Julie Moore.

After the old WorldCom has gone through a fraud investigation and accounting irregularities in the past year, a boycott makes no sense, Moore added. “MCI is a company of 55,000 hard-working, dedicated employees who have already suffered a great deal at the hands of the few who were involved in wrongdoing,” she said. “We don’t see what a boycott would accomplish here, other than to hurt the people who have suffered enough.”

But Nelson, a one-man thorn in MCI’s side, said stockholders deserve to get something out of MCI’s bankruptcy, in addition to other creditors. “Thousands of people apparently feel that the current bankruptcy reorganization plan is unfair,” he wrote in a press release this week. “The U.S. Trustee and the bankruptcy judge may accept this plan but the average citizens may reject it by cancelling their MCI WorldCom service.”

On his Web site, he urges people who plan to cancel two MCI services, such as long-distance and Internet service, to send him two e-mail messages. “If you expect to persuade your friends or family members to cancel, send an email for each expected cancellation. Please don’t type messages in these emails. I am not going to read the emails. I am just going to count them,” the Web site says.

Other than a series of press releases carried on a public relations Web site, Nelson has gotten little media attention for his effort. He’s even tried sending out spam about the boycott effort, with about 300,000 unsolicited commercial e-mails going out earlier this month. But most responses, he said, have come from people reading the press releases.

He may try spam again, he said, after he figures out why the first batch received such a small response. “Spam has the opportunity to be the small person’s chance to make a speech to the world,” he added.

But spamming does have its downside. “My friends who I talk to about it won’t walk down the street with me, because they don’t want to be associated with a spammer.”

Nelson noted that on Wednesday, the U.S. Securities and Exchange Commission modified its proposed fraud settlement with MCI, asking that the company contribute stock worth $250 million, in addition to the $500 million in cash already required, to compensate victims of its fraud. Nelson said he can’t take credit for that change, although a couple of people e-mailed him and thanked him for it, but pressure from a number of sources could cause changes in the reorganization plan.

Groups including the Gray Panthers and Citizens Against Government Waste have questioned MCI’s contracts with the federal government, and U.S. Senator Susan Collins, a Maine Republican, said in late May that the Senate Government Affairs Committee would investigate MCI’s government contracts. These efforts could cause MCI to rethink the reorganization plan, Nelson said.

“I don’t care who gets the credit; let’s get something to happen,” he said. “I’m a bit of a crusader. I’ll keep doing what works.”