Ebbers May Cede Pension For Loan PaymentNov 12, 2002 | AP
Former WorldCom Inc. chief executive Bernard J. Ebbers may relinquish some or all of his $1.5 million annual pension to help settle a $408 million personal loan from WorldCom that helped precipitate his ouster, people familiar with the matter say.
WorldCom's board also has been seizing assets Ebbers pledged as collateral for the loan, fearing that he will declare bankruptcy, the sources said. The company and Ebbers' attorneys have been discussing a plan under which Ebbers would receive credit toward the huge loan by giving up the pension.
Ebbers used the $408 million company loan to pay off outside personal debts.
But Ebbers, who resigned as chief executive in April amid controversy over the sizable company loan, may not have sufficient assets to repay even half the loan, sources close to the negotiations said.
Ebbers had pledged company shares as collateral. But those shares, once valued at $286 million, are worthless. The other major assets backing the loan are 500,000 acres of timberland in the Southeast and a large Canadian cattle ranch.
WorldCom - which filed for bankruptcy in July and expects its accounting misstatements to top $9 billion - has already assumed Ebbers' 51 percent interest in a Georgia yacht-building business.
An attorney for Ebbers, Reid H. Weingarten, said the shipyard interest had been transferred to WorldCom amicably and that it was incorrect to characterize the transfer as a seizure. Ebbers is ''in good faith negotiations'' with WorldCom, he said.
WorldCom also is pushing Ebbers to repay the loan sooner than its five-year term, the sources said. Also under discussion is Ebbers' severance package, which includes use of a corporate jet.