A group of ex-WorldCom Inc. directors agreed to settle claims that they participated in financial wrongdoing that led to the company’s collapse, the pension fund leading the investor suit said.

David Neustadt, a spokesman for the New York State Common Retirement Fund, which is leading the lawsuit on behalf of WorldCom bondholders and shareholders, said most of the directors agreed ``in principle’’ to settle. David Elbaum, a lawyer for the directors with New York’s Simpson Thacher & Bartlett, didn’t immediately return calls seeking comment.

The settlement, the terms of which Neustadt said might be announced this week, allows the plaintiffs to focus on preparing for a January 2005 trial against the dozen investment banks that underwrote WorldCom securities before it filed the biggest bankruptcy in U.S. history two years ago.

On July 20, U. S. District Judge Denise Cote gave preliminary approval to Citigroup Inc.’s $2.65 billion settlement for its role as an underwriter of the long-distance company’s securities. The other investment banks, including J. P. Morgan Chase & Co. and Bank of America Corp., declined to accept the offer of a matching settlement.

WorldCom, which filed for bankruptcy protection July 2002, restated $11 billion in earnings after disclosing misstatements of its finances. The company emerged from bankruptcy in April as MCI Inc.

WorldCom investors have until the end of the month to decide whether to participate in the class action.

Should Have Known

Lawyers for the investors, led by Sean Coffey of New York’s Bernstein Litowitz Berger & Grossman, said in court papers that the banks should have known that WorldCom was engaged in fraud before funding the second-largest bond issue in U.S. history in May 2001.

Investors cited WorldCom documents that show discrepancies between actual company expenses and reported expenses. The banks should have noticed the discrepancies before underwriting the $10.1 billion bond issue, investors argued in pre-trial papers and hearings.

Former Chief Executive Bernard Ebbers faces trial in New York federal court Nov. 9 for criminal securities fraud related to the company’s collapse. He is also named in the class-action suit.

WorldCom lost $200 billion in market value before filing its bankruptcy. The company is the second-largest U.S. long-distance phone-service provider after AT&T Corp.

Fraudulently Reduced

Investors say WorldCom fraudulently reduced its expenses in 2001 and 2002 by hiding line costs -- fees paid to other telephone companies for use of their transmission lines -- in the capital budget, rather than reporting them as operating expenses.

WorldCom’s investment banks, securities companies that have billions of dollars in reserve, are the primary targets of the litigation.

Jay Kasner, a lawyer for the investment banks with New York’s Skadden Arps Slate Meagher & Flom LLP, didn’t immediately return calls for comment.

The case is In Re WorldCom Litigation, 02-cv-3288, U. S. District Court for the Southern District of New York.

The company once known as WorldCom has filed suit against former chief executive Bernard Ebbers in a bid to collect more than $US300million ($416 million) the deposed executive still owes on loans totalling $US408 million.

Mr Ebbers was ousted in April 2002, largely as a result of controversy over the loans he had taken from the company, now known as MCI.

WorldCom filed for bankruptcy protection in July 2002, in the wake of an accounting fraud that ultimately came to about $US11 billion.

MCI has since worked with Mr Ebbers to sell assets he pledged as collateral for the loans and has recovered about $US70 million, according to the complaint the company filed in the US Bankruptcy Court.

Sources said MCI filed the suit to preserve its legal rights but was still working with Mr Ebbers on the debt. MCI is the US’s second-largest long-distance phone company by revenue after AT&T.

It emerged from bankruptcy protection in April.

The company is seeking to void a repayment plan that allows Mr Ebbers to pay off the loans and interest over five years at interest rates well below market levels.

He faces criminal fraud and conspiracy charges in connection with the scandal at the company he founded. He has maintained his innocence.

Mr Ebbers starting taking loans from the company in 2000 after company stock he had pledged as collateral for personal loans lost value.

STAMFORD, Conn.(BUSINESS WIRE)Dec. 8, 2003--
Multi-Year Agreements to Provide High Value, Carrier Grade IP Voice Service

Time Warner Cable today announced strategic partnerships with MCI and Sprint, two of the nation’s leading telecommunications companies, for the nationwide deployment of Digital Phone, Time Warner Cable’s residential Internet protocol («IP») voice service. Building on the successful rollout earlier this year in Portland, Maine, Time Warner Cable recently launched its residential IP phone service to select customers in North Carolina. The multiple-year deals with MCI and Sprint will help enable the company to continue its aggressive rollout throughout next year.

«We are pleased to partner with MCI and Sprint and benefit from their experience in delivering high quality phone service, their focus on customer service, and desire to be at the cutting edge of VoIP network development,» said Time Warner Cable Chairman and CEO Glenn Britt. «Capitalizing on their local points of interconnection, our broadband cable system and the efficiencies and flexibility of IP technology, Time Warner Cable is now poised to deliver consumers local and long distance telephony services more efficiently, at a lower cost, and with the reliability and quality of service that customers require.»

MCI and Sprint will assist Time Warner Cable in the provisioning of Digital Phone service to customers, termination of IP voice traffic to the public switched telephone network, delivery of enhanced 9–1–1 service, local number portability and carrying long distance traffic.

The agreement also marks a major expansion for MCI and Sprint into the cable wholesale market resulting in a prospective revenue stream with strong growth potential. Both companies plan to leverage their telecom assets and communications expertise in order to help drive this expansion and deliver telephony solutions.

«Time Warner Cable is a known leader in the industry and it is great to partner with them as they engage in another industry-first with the deployment of Digital Phone,» said Paget Alves, president of strategic accounts, Sprint. «Sprint’s value proposition to the cable industry makes sense as an alternative to cable operators’ building their own voice infrastructure as well as leveraging our existing networks, management experience and technical knowledge. Our intent is to fulfill as many of their telecommunications needs as they want--from basic transport to a fully outsourced solution that includes network design, implementation and management, all backed by guaranteed performance and comprehensive support.»

«The time has come for a new solution that delivers all of the simplicity, quality and value that customers want — full service communications, high-speed Internet and video -- all in one package, on one bill, from a single provider,» said Jonathan Crane, MCI executive vice president of corporate development and strategy. «This partnership represents the next evolution in consumer communications — leveraging the added capabilities of cable and the global reach of the MCI IP network to create services that leave the old public switched network behind.»

Digital Phone includes unlimited local, in-state and domestic long distance calling for one low monthly price. By leveraging new technology on its existing advanced managed network with quality of service standards, Time Warner Cable is able to offer phone service at a flat price and ensure that customers receive the level of quality offered by traditional telephone service.

Consumers switching to Digital Phone can keep their existing phone numbers and retain their directory listings. Standard features of the service include 411 directory assistance, 611 service calls, Enhanced 9–1–1 emergency service, operator assisted calls, call waiting, caller ID and voice mail. Additionally, the residential phone service connects to each telephone jack in the home by utilizing whole-home wiring.

About Time Warner Cable

Time Warner Cable owns and manages cable systems serving 10.9 million subscribers in 27 states, which include some of the most technologically advanced, best-clustered cable systems in the country with more than 75% of the Company’s customers in systems of 300,000 subscribers or more. Utilizing a fully upgraded advanced cable network and a steadfast commitment to providing consumers with choice, value, and world-class customer service, Time Warner Cable is an industry leader in delivering advanced products and services such as video on demand, high definition television, high-speed data, wireless home networking, and digital video recorders. Time Warner Cable is a subsidiary of Time Warner Inc.

About WorldCom

WorldCom, Inc. (WCOEQ, MCWEQ), which currently conducts business under the MCI brand name, is a leading global communications provider, delivering innovative, cost-effective, advanced communications connectivity to businesses, governments and consumers. With the industry’s most expansive global IP backbone, based on the number of company-owned POPs, and wholly-owned data networks, WorldCom develops the converged communications products and services that are the foundation for commerce and communications in today’s market. For more information, go to [ >>> ]

About Sprint

Sprint is a global integrated communications provider serving more than 26 million customers in over 100 countries. With approximately 68,000 employees worldwide and nearly $27 billion in annual revenues, Sprint is widely recognized for developing, engineering and deploying state-of-the-art network technologies, including the United States’ first nationwide all-digital, fiber-optic network and an award-winning Tier 1 Internet backbone. Sprint provides local communications services in 39 states and the District of Columbia and operates the largest 100-percent digital, nationwide PCS wireless network in the United States. For more information, visit www.sprint.com.