Qwest probe threatens another WorldCom
Fears of another Worldcom grew when US telco Qwest admitted it was under criminal investigation by the US Attorney's office.
In a brief announcement, the Colorado-based firm said it notified by the Attorney’s office on Tuesday afternoon and would fully co-operate with the investigation. The news sent its shares down to $1.67 on the New York Stock Exchange, losing 35.6% of its value.
But the exact nature of the investigation was not disclosed.
This follows on from a report last Friday in the Wall Street Journal that the US department of Justice had launched a criminal investigation into the troubled telco, citing people with knowledge of the situation. The Securities and Exchange Commission is also probing into the firm’s accounts.
The company has been under considerable pressure for some time now as it struggles under a $26bn (£18bn) mountain of debt. Credit rating agencies have marked its debt down to ‘junk’ status.
Last June, Qwest ditched its chairman and chief executive Joseph Nacchio in a bid to prop up its share price and allay investor fears.
The disclosure is just the latest in a series of high-profile companies to come under examination from US government agencies.