McLeodUSA's reorganization plan approved in court April 5

McLeodUSA Inc. April 5 received approval of its Chapter 11 reorganization plans from the United States Bankruptcy Court for the District of Delaware.

"We expect the plan to be effective April 16," said Bruce Tiemann, senior manager of external relations for McLeod-USA. "Nine weeks of a Chapter 11 case is pretty rapid movement."

The Cedar Rapids, Iowa-based corporation's Jan. 31 filing marked the fourth largest bankruptcy in the recently battered, yet still vast, telecommunications industry.

Ultimately, the reorganization plan calls for eliminating $3 billion of high yield debt and approximately $325 million of associated interest expense.

The plan also includes the acceptance of $175 million from Forstmann Little & Co., a New York-based investment company. Forstmann Little contributed $1 billion in 1999 and now holds a 58 percent stake in McLeodUSA.

The corporation sold its wireless licenses for about $100 million to a group of buyers, and plans to sell its publishing

division for $600 million. Employment reductions and facility shuffling also played a role in the rapid reorganization.

Tiemann said McLeodUSA reduced its staff by 15 percent and now claims 8,600 employees company-wide as reported in the 2001 annual report, the most recent report available. Results have not yet been posted for first-quarter 2002, which ended March 31, Tiemann said.

Consolidations and closings of offices and other facilities did occur, but Tiemann said Springfield wasn't impacted in that way.

Other reorganization plans included abandoning plans for a national network and scaling back capital spending.

He said McLeodUSA has been fortunate to continue all regular operations in its existing 25-state region.

McLeodUSA stock, which is traded on the NASDAQ under the symbol MCLD, has dropped as low as 15 cents per share this year. Its 52-week high in 2001 was $10.29 on April 18 and its stock traded at an all-time high of $35.93 in early 2000. For the year 2001, McLeodUSA reported a net loss per share of $4.50, according to the company's Web site, www.mcleodusa.com.

The company's consolidated income statement showed a net loss of $3.6 billion in 2001. However it projects a net income of $746 million this year.