WorldCom Inc. has taken control of a 500,000-acre Canadian cattle ranch owned by its former CEO Bernard J. Ebbers, and is trying to sell it to recoup part of Ebbers’ $408 million personal loan from the bankrupt telecom giant.
The Douglas Lake Ranch in British Columbia which includes posh fishing resorts, a working cattle ranch, timberlands and a farm equipment leasing business — has no asking price. But real estate professionals say improvements made since Ebbers bought the property in 1998 make the ranch worth substantially more than its $65 million asking price five years ago.
“There’s been a lot of value added to the ranch, there’s a lot of interest that’s been expressed in it now 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.
Ebbers’ attorney, Reid H. Weingarten, couldn’t be reached Monday for comment. But Weingarten has said Ebbers wants to try to repay his WorldCom debt rather than declare bankruptcy.
Ebbers, who built WorldCom into an industry giant, had relinquished his $1.5 million WorldCom pension. He also agreed to help liquidate assets pledged as collateral for his loan from the Clinton-Miss.-based corporation.
Besides business investments, Ebbers also pledged his company shares once valued at $286 million as collateral for that and other loans.
Altogether, Ebbers borrowed $1.3 billion from WorldCom and major banks over a 10-year-period, 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. WorldCom’s stock is now worthless.
WorldCom, which admitted to more than $9 billion in accounting fraud, filed the largest bankruptcy in U.S. history last July. Ebbers, once worth an estimated $1.4 billion, resigned in April amid controversy over the massive loans and questions over WorldCom’s mounting financial woes.
Ebbers has not been charged in connection with an ongoing investigation of the accounting fraud by the U.S. Justice Department and Securities and Exchange Commission.
Besides the Canadian ranch, WorldCom hopes to find buyers for other Ebbers assets tied to his company loan: 548,000 acres of Southern timberland he bought for $658 million, a Louisiana soybean and rice farm and his interest in a Georgia shipyard and a Mississippi refrigerated trucking company.