MCI Avoids Prosecution
Federal prosecutors said they would not prosecute MCI over the massive accounting fraud that occurred at its predecessor company, WorldCom. The decision removes a legal thorn ahead of MCI's $8.46 billion merger with Verizon Communications, which is expected to close later this year.
U.S. Attorney David N. Kelley of the Southern District of New York said he balanced several factors, including the company's cooperation with the government, its agreement to pay $750 million in restitution and the "severe and unintended impact" a prosecution of the company would have on thousands of innocent employees, according to a news release.
Separately, a source familiar with the company said it was close to an agreement with the District and 15 states to pay $315 million to resolve the great majority of an estimated $750 million in domestic tax liabilities. The source said the agreement, which could be announced as early as next week, would diminish the chances that Verizon might cut its purchase price for MCI, something it can do if certain MCI liabilities exceed $1.78 billion.
Virginia Moves on With MCI-Verizon Review
Virginia's State Corporation Commission decided to push ahead with a hearing over Verizon's proposed $8.46 billion acquisition of Ashburn-based MCI, despite protests from competitors and the state agency's staff over a recent filing by the two companies. Agency staffers asked for more time to evaluate last week's 214-page filing. The commissioners indicated their desire to start the hearing process and stick to a state-mandated deadline that the independent state agency act on the merger application by mid-October.
MCI and Verizon have called the SCC staff's request an "unjustified delay tactic." Verizon said 14 states have not yet made a decision on the Verizon-MCI merger.
Host Marriott Buys Capitol Hill Hotel
Bethesda-based Host Marriott agreed to buy the 834-room Hyatt Regency Washington on Capitol Hill for about $274 million from a unit of Blackstone Real Estate Advisers. The hotel's 2006 operating profit is projected to be $14.5 million.
The deal is expected to close at the end of the month.
Compiled from staff and news service reports.