EDS in deal for $187m to settle WorldCom dispute

EDS in deal for $187m to settle WorldCom dispute

Electronic Data Systems (EDS) will find out on December 23 if a proposed agreement to settle long-term disputes over billing and outsourcing with WorldCom has been accepted by the court running WorldCom's bankruptcy proceedings.

The agreement, filed with the US Bankruptcy Court, Southern District of New York last week, proposed that EDS should pay US$187 million to WorldCom over the next 12 months to settle the dispute between the companies.

The agreement also includes changes to the Global Networking Outsourcing Agreement (GNOA) between the two companies.

The GNOA requires EDS to buy a minimum amount of services from WorldCom each year or pay a shortfall payment, and establishes the rates that will be charged. The two companies have been in dispute since 2000 over the minimums and charges, the proposal said, and it is proposed that both be changed.

Local Exchange Carriers (LECs), which allow EDS access to their networks, would also be paid $14.7 million owed to them by WorldCom, the agreement said.

An EDS spokeswoman, Kristin Dobrowolski said that while the agreement involves EDS paying a large amount of money to WorldCom, the changes to the charges and minimums, plus the payments to LECs, give a balance to the agreement.

The terms of the agreement, if approved, would have a "slightly positive but not material effect on EDS' earnings for 2002 (but) are not expected to have an impact on earnings in 2003," Dobrowolski said, reading a prepared EDS statement.

WorldCom filed for bankruptcy on July 21 but has continued to operate.

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