May 23, 2002 By John Porretto Ap Business Writer 2 min read

CLINTON, Miss. (AP) – WorldCom Inc. shares rose more than 11 percent Wednesday in the wake of the telecommunications company’s announcement that it is eliminating its MCI tracking stock. The company announced the recombination of the WorldCom and MCI issues after the stock market closed Tuesday. The move was widely expected by analysts as management searches for ways to cut costs and position itself to repay $30 billion in long-term debt.

WorldCom executives said the move will save the company more than $284 million a year in dividend payments.

In a conference call before the markets opened Wednesday, chief executive John Sidgmore said the restructuring was based partly on “the belief that a more simple and straightforward approach to business will help all of our stakeholders better understand our true condition and make it easier to invest and do business with WorldCom.”

Under the restructuring plan, MCI shares will cease trading July 12. Each outstanding share of MCI will be converted into 1.3594 shares of WorldCom common stock.

Fractional shares will be paid in cash.

MCI stockholders as of June 30 will also be paid the previously declared dividend of 60 cents a share July 15.

Analyst David Burks with J.J.B Hilliard, W.L. Lyons in Louisville, Ky., said he suspected the rise in MCI shares was larger than that in WorldCom shares because of the conversion ratio and the planned MCI dividend.

“It’s a premium in terms of the ratio, and you can buy MCI today and know you’re going to get a 60-cent dividend on a $2.60 stock,” Burks said. “I’m guessing that’s what caused the big pop.”

WorldCom shares have been battered in recent months as the company faces concerns about debt and a Securities and Exchange Commission investigation into lending and accounting.

WorldCom shareholders approved the creation of the MCI tracking stock June 7, separating the company’s two distinct sectors. WorldCom Group includes the data and Internet businesses the company sells to large corporate clients; MCI Group consists of long-distance and other consumer services.

The plan to eliminate the tracking stock will leave WorldCom with one class of common stock with the Nasdaq ticker symbol WCOM.

WorldCom officials also said they expect to secure a $1.5 billion credit arrangement Thursday and continue to negotiate for a $5 billion credit line. Company officials have said they hope to reach an agreement with lenders on the $5 billion by the end of next month.