Ebbers fortune at risk as share prices slid
Bernie Ebbers used his substantial number of shares in telecoms giant WorldCom to guarantee a $400m (£212m) personal loan from Bank of America, a US court heard yesterday.
But as WorldCom's stock price fell over 2000 and 2001 the bank called on Ebbers to pay the loan or stump up more security for the loan. If he failed, Bank of America threatened to sell his stock, according to Ebbers' personal banker Jayne Hammond who testified yesterday.
In the end, WorldCom backed Ebbers' entire loan, AP reports.
Yesterday's testimony follows that of former WorldCom financial controller David Myers last week. Ebbers - who is facing fraud charges in relation to the $11bn (£5.8bn) collapse of WorldCom in 2002 - feared that his personal fortune would be "wiped out" unless something was done to improve the financial health of ailing telecoms outfit WorldCom.
Myers recalled a meeting in 2001 where the former WorldCom boss called on senior execs to turn the company around. The stock price was falling as expenses spiralled and revenues had dipped. Testifying last Friday, Myers told the court that Ebbers had said that if things didn't improve "everything that I worked for since I joined WorldCom will basically be wiped out". Recalling the meeting, Myers continued: "He made a plea to everybody to do everything they could possibly do to work to reduce costs."
Ebbers denies the charges against him. The trial is expected to last eight weeks. ®
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