WorldCom has taken control of a 500,000-acre Canadian cattle ranch owned by former Chief Executive Officer Bernard Ebbers and is trying to sell it to recoup part of Ebbers’ $408 million personal loan from the bankrupt telecom giant.
There is no list price for the Douglas Lake Ranch in British Columbia, which includes posh fishing resorts, a working cattle ranch, timberlands and a farm-equipment-leasing business.
But real-estate professionals say improvements made since Ebbers bought the property in 1998 make the ranch worth substantially more than its $65 million price of five years ago.
“There’s been a lot of value added to the ranch … and I think it is worth more than it was,” said Mark Lester, an associate vice president with Colliers International, a British Columbia commercial real-estate firm that is jointly marketing the property.
“The concept of recovering money that flowed out to Bernard Ebbers is great,” said Lynn Sarko, a Seattle lawyer who represents WorldCom employees who lost money on company stock in funds bought for their retirement.
Ebbers’ attorney, Reid Weingarten, couldn’t be reached yesterday for comment.
Ebbers also has relinquished his $1.5 million WorldCom pension. He also agreed to help liquidate assets, including the ranch, pledged as collateral for his loan from the company.
Besides business investments, Ebbers pledged his company shares once valued at $286 million as collateral for that and other loans. Ebbers borrowed a total of $1.3 billion from WorldCom and banks over a decade, using some of the money to buy properties financed with margin loans backed by WorldCom’s stock. Former WorldCom board members said they agreed to lend Ebbers money, fearing a stock collapse if Ebbers sold his shares to repay lenders. Company shares are now worthless.
Clinton, Miss.-based WorldCom, which admitted to more than $9 billion in accounting fraud, filed the largest bankruptcy in U.S. history in July.
Ebbers, once worth an estimated $1.4 billion, resigned in April amid controversy over the loans and questions about WorldCom’s financial woes. The Justice Department and Securities and Exchange Commission are investigating accounting fraud at the company. Ebbers has not been charged with any crime.