The fallout from WorldCom’s bankruptcy filing and reorganization plan continues to impact the metro Jackson economy.
On Feb. 28, about 300 local employees, or 41% of WorldCom’s workforce in metro Jackson, were given the pink slip as part of the corporation’s 100-day restructuring plan. About 5,000 WorldCom employees were laid off nationwide. WorldCom CEO Michael Capellas said it should be the last round of terminations before the plan is evaluated in April.
“I was relieved that my job was secure,” said a WorldCom IT supervisor at Clinton headquarters. “Now I can go ahead with plans to purchase land and build a house here.”
The WorldCom employee said several people she supervised in Clinton lost their jobs, as well as several employees in the Atlanta office that she supervised. “We’re definitely feeling the effects of having to double up on the workload, but it’s obviously worth it to keep our jobs,” she said. “Everyone has a good feeling about Mr. Capellas’ ability to take the company forward.”
None of the 900 local employees of SkyTel, a subsidiary of WorldCom that the company is trying to sell, were affected in the latest round of job cuts.
The company is also moving forward with plans to close several local office buildings and move some Jackson area employees to WorldCom facilities in Alpharetta, Ga., and Ashburn, Va.
Mark S. Bounds, CCIM, president of Mark S. Bounds Realty Partners Inc., in Madison, became the sole local representative for WorldCom property in Mississippi when New America International (NAI), an international real estate firm based in Hightstown, N.J., with Hilco Real Estate, LCC, won the liquidation account.
“We’ve evaluated all their leases and we have buyers for both buildings (in downtown Jackson and in Clinton), if it comes to that,” Bounds said in January. “We’re just waiting for the final decision by the bankruptcy judge to determine the size of the company.”
According to the Hilco Real Estate Web site, the bid deadline date and auction is slated in April for WorldCom properties, which include the former WorldCom administration building in Arlington, Va., which is fully leased to the U.S. government; network information centers in Atlanta, Ga., Richardson, Texas, Somerset, N.J., and St. Louis, Mo.; land in Denver, Colo., Baldwin, Fla., Schaumburg, Ill., Dorsey, Md., Sterling Heights, Mi., Corpus Christi, Texas, Irving, Texas, and Ashburn, Va.; antenna sites in three Texas locales: Burleson, Houston and Southlake; land with buildings in Lauderhill, Fla., Southfield, Mich., and Columbus, Ohio; and a call center in Garden City, N.Y.
The only reference to Mississippi is the airplane hanger at the Jackson Municipal Airport. “When WorldCom put that up for sale, it was a pretty big clue to their intended presence in Mississippi,” said Stacey Wall, president of Ridgeland-based Pinnacle Trust. “I mean, they’re not going to have airplanes flying in very often without an airplane hanger.”
According to several sources, Entergy and Saks Inc. have looked at WorldCom office space in Jackson and Clinton and considered buying or leasing part of it. It seems feasible for Entergy to consider the space, which could be used to consolidate some of its Mississippi operations, but Entergy spokesperson Robert Lesley said that’s not the case. “I’ve gotten several calls over the past few weeks from reporters who’ve heard rumors that Entergy is taking over the WorldCom building, but they’re only rumors,” he said. “We have no plans for the building that I’m aware of.”
The deal may also look appealing to Saks Inc., which operates its Saks Department Store Group (SDSG) with 242 department stores under the names of Parisian, Proffitt’s, McRae’s, Younkers, Herberger’s, Carson Pirie Scott, Bergner’s and Boston Store. The company also operates Saks Fifth Avenue Enterprises (SFAE), which consists of 61 Saks Fifth Avenue stores and 52 Saks Off 5th stores. But in early March, Saks spokesperson Julia Bentley said, “We are not pursuing anything related to the WorldCom property.” At press time, Bounds was out of the country and could not be reached for comment on this story.
“If WorldCom eventually does leave, we have to be optimistic that another company will want those facilities and possibly hire more people and help the community continue to grow,” said Phillip Holman, CCIM, vice president of leasing and brokerage for The Mattiace Co. in Jackson and 2002 president of the Mississippi Commercial Association of Realtors. “However, the City of Clinton was doing well before WorldCom and will continue to thrive.”
Last month, WorldCom CEO Michael Capellas vowed to keep the Clinton campus open, adding that 100 new high-tech workers would be transferred to the area soon. But analysts speculate that WorldCom may move its Clinton employees to the downtown Jackson office and sell its Clinton headquarters.
“The Clinton campus … it’s already a ghost town,” said Wall. “I can’t imagine that WorldCom will keep it long term. I can see the company downsizing, where it keeps a small presence in Mississippi, maybe working out of the building downtown. If WorldCom could find someone like Entergy to take over the Clinton campus, that makes sense, although I don’t know if Entergy needs all that space. Saks doesn’t make much sense.”
Even though Mississippi’s economy has been affected by the layoffs since WorldCom disclosed the $3.8-billion accounting fraud last June — accounting discrepancies totaled more than $9 billion by year-end–the bigger impact has been money lost by WorldCom stockholders, said Wall.
“Our economy in Mississippi and metro Jackson is struggling, but it’s not stagnant and it’s nothing different than what we’re seeing nationwide,” he said. “I think what’s having much more of an impact on the economy in Mississippi — and I don’t know any way to put statistics on it — is that so many people had so much WorldCom stock, and so many of them rode it down to the ground. That, more than the loss of jobs at WorldCom, has hurt Mississippi’s economy.”
The status of WorldCom’s real estate portfolio and its layoff plans are only two factors in the cataclysmic changes occurring at the Clinton-based telecom giant. Late last month, The New York Times reported that Salomon Smith Barney telecom stock analyst Jack B. Grubman coached former WorldCom CEO Bernie Ebbers on his script during a conference call with Wall Street analysts early last year to discuss fourth-quarter results. According to documentation uncovered by securities regulators in an investigation of Wall Street research practices, Grubman advised Ebbers to downplay concerns about the corporation’s problems.
In January, WorldCom won permission from the bankruptcy court to sell Ebbers’ yacht firm, Intermarine Savannah, which the company took over last year after Ebbers listed it as collateral for several investments backed by WorldCom stock. Other businesses of Ebbers that he listed as collateral for similar loans have been sold or are being sold. The most high profile possession being advertised for sale in The Wall Street Journal and other financial publications is Ebbers’ beloved Douglas Lake Ranch in British Columbia, Canada, for which he paid approximately $66 million in 1998.
Now under the direction of WorldCom, Hilco Real Estate is listing Canada’s largest working cattle ranch, with 164,000 deeded acres and 350,000 acres of crown land. It features 360 million board feet of timber, 20,000 head of cattle, and 300 horses. Hilco advertises “offers will be received until close of business March 31.”
Meanwhile, former Wo
om CFO Scott Sullivan is awaiting trial in the
U.S. District Court of the Southern District of New York, which has nearly two dozen civil and criminal cases pending for action. His request for a change of venue to be tried in the Washington, D.C., area was denied. And no acti
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