Throughout the 1980s and 1990s, this telecommunications company built an excellent reputation among consumers and the investment community as an innovative long-distance telephone service and Internet provider. However, following a 1997 merger with a competitor, the combined company committed the largest commercial fraud in history, leading the company in 2002 to enter what was at the time the biggest corporate bankruptcy in U.S. history.
Affiliates of Cerberus bought a substantial portion of the telecommunications giant’s debt in 2003, and in a regulatory environment hostile to the long-distance sector, helped lead a successful effort to revitalize, reorganize and rebuild the credibility, profitability and value of the company.
Cerberus’s contributions and actions during this critical period included:
- Appointing a Cerberus executive as co-chair of the company’s creditors’ committee
- Leading the successful fight in U.S. Congress to prevent competitors’ attempts to criminalize the company and bar it from government business
- Appointing a Cerberus executive to the reorganized company’s Board of Directors
- Recruiting a widely-respected industry executive as CEO to strengthen the management team
- Integrating the company’s IT systems, reducing operating costs and focusing sales efforts
- Guiding the successful sale of the revitalized business to another telecommunications company for $14 billion in 2005
Upon emergence from bankruptcy in 2003, the company returned to its roots as a healthy, well-capitalized telecommunications leader and attractive strategic acquisition target.