Qwest Revises $8-Billion Offer for MCI

Qwest Communications International Inc. reworked its $8-billion bid Thursday for MCI Inc. in hopes of scuttling a deal the long-distance carrier made last week to be acquired by Verizon Communications Inc.

Qwest, a regional telephone company based in Denver, changed some terms of its cash-and-stock offer to provide MCI shareholders more cash sooner and some guarantee against fluctuations in the stock price.

But the mix of cash and stock and the overall price remained the same: $9.10 a share in cash and $15.50 a share in stock.

Still, the package is about 19% more than the $6.75-billion cash-and-stock offer that MCI directors accepted Feb. 13 from Verizon, the nation’s largest phone company.

MCI said the board would conduct a “thorough review of the Qwest offer.”

The Qwest bid, some experts believe, is aimed squarely at hedge fund operators and other newer MCI shareholders who are primarily concerned about getting the most money for their stock.

Many are former creditors of MCI predecessor WorldCom Inc. who agreed to accept shares of MCI for the debt securities they held.

MCI directors, operating with no deadline, are expected to determine whether the Qwest bid is superior to the Verizon deal. If so, they will give Verizon five business days to respond.

Directors chose Verizon’s lower offer to become part of a bigger, nationwide company with a full range of voice, video and data services.

Verizon also would pump $3.5 billion into MCI to upgrade a mishmash of more than a dozen separate networks.

The two would become a counterweight to the phone giant being created through the $16-billion acquisition by SBC Communications Inc. of AT&T; Corp., the nation’s largest long-distance company and the biggest telecom provider to corporations and government.

But MCI also faces lawsuits from shareholders upset with the board’s decision to accept the lower bid.

Under the deal, Verizon would pay $1.50 a share in cash, $4.50 in MCI cash dividends and $14.42 in stock, giving shareholders about a 4.5% interest in Verizon.

The total package amounts to $20.42 a share.

Qwest’s revised bid is for $6 a share in MCI dividends, $3.10 in cash at closing and $15.50 in stock, giving shareholders a 40% stake in Qwest.

The total package is valued at $24.60 a share.

In its last bid, Qwest had offered $1.50 a share in MCI dividends and $7.50 in cash.

Wall Street wasn’t much impressed by Qwest’s revision. Qwest shares gained 15 cents to close at $4.20, and Verizon fell 5 cents to $35.50, both on the New York Stock Exchange. MCI shares gained 26 cents to close at $23.21 on Nasdaq.