In a press release issued Monday, July 22, Embratel said it won?t be affected in any way by WorldCom?s decision to file for Chapter 11 protection from creditors. Embratel is Brazil?s incumbent long-distance carrier and is a wholly-owned subsidiary of WorldCom. The release, signed by Embratel CEO Jorge Rodriguez, says ?operating flows between the two companies are confined to the results of normal commercial transactions between telecommunications carriers and payment of management fees in accordance with Embratel?s concession contract?. It also notes that there are no loans between the two companies and says Embratel will invest 1.1 billion reals this year as planned. Analysts point out that WorldCom has massive debts and may have to sell some of its most valuable assets, including Embratel, to repay them. Brazilian law doesn?t allow a change of ownership until the middle of next year, but the Government is authorized to intervene in a telecoms company ?threatened by economic and financial fragility?. When WorldCom?s bankruptcy began to look probable, Anatel officials and Communications Minister Juarez Quadros ruled out intervention in the case of Embratel. However, TELETIME News has learned that Anatel has been monitoring the carrier very closely ever since it was removed from WorldCom?s consolidated balance sheet, suggesting a plan to divest.
Crisis
