WorldCom dumps £100m UK firm as 500 jobs are axed

WorldCom, the scandal-ridden US telecoms giant, has shut down a £100m UK subsidiary despite receiving several cash offers for the business and a buyout proposal from management.

The Independent on Sunday has learned that the offices of MK International, based in Woking, Surrey, were being cleared this weekend after WorldCom baffled management by pulling the plug on the business.

MKI, a project management firm specialising in telecoms, is thought to have employed around 500 people in the UK. But weeks before WorldCom filed for bankruptcy protection, senior management decided to close the firm, which also has offices in continental Europe and Hong Kong.

Well-placed sources revealed that shortly before the decision was taken, WorldCom received four conditional offers for MKI. They are understood to have come from companies including Smith-Woolley and Medlock Communications.

It is understood that an information memorandum prepared by management showed that last year the business produced earnings before interest, tax, depreciation and amortisation of around £3m. Despite this, the offers for the business were rejected by WorldCom's head office in Mississippi.

Desperate to keep the business running, MKI's management, headed by its former managing director Nic Hart, put together a buyout proposal. Again, it was rejected by WorldCom. In its accounts filed at Companies' House in April, MKI says: "WorldCom has confirmed its intention to provide continued support ... for a period of at least 12 months."

WorldCom refused to comment on the U-turn or why the offers for the business were rejected. A spokeswoman said the company was closed because "a business decision was taken earlier this year for MKI to cease all third-party business" and that WorldCom had now "completed its network build-out in Europe for the time being".

But it is understood that at the time the business was closed it had outstanding contracts with customers, including T-Mobile.

The news comes amid reports that prosecutors are preparing to bring charges against former WorldCom executives. This week is also the deadline for companies to submit offers for Global Crossing, another collapsed American telecoms company, which has debts of $12.4bn (£7.9bn).

In May a $750m offer for the company from Hutchison Whampoa was rejected by creditors. Separately, investment bank Close Brothers is auctioning Global Crossing's UK business. But last week venture capitalist Apax Partners, a front-runner, pulled out. Private equity company Carlyle Group is still thought to be interested. But insiders said that the UK sale could now be called off and the business sold with the rest of Global Crossing.