WilTel may default on $360 million in loans

Leucadia National Corp.'s data network unit, WilTel Communications Group, said it may default on $360 million in loans after the expected loss of its largest customer, SBC Communications Inc.

San Antonio-based SBC plans to shift business away from WilTel, formerly Williams Communications Group, after acquiring AT&T Corp. for $16 billion, Leucadia said in a Securities and Exchange Commission filing Wednesday.

Leucadia is run by chairman and former Utah resident Ian Cumming and president Joseph Steinberg from offices in Salt Lake City and New York.

If SBC ends its "preferred provider" relationship with WilTel, a default would occur if forced by lenders. WilTel may also look for merger opportunities and write down its assets. It's one of several phone companies whose business ties will change as a result of SBC's planned agreement to buy AT&T.

Leucadia last year said it may bid for control of AT&T rival MCI Inc. and later sold its 5 percent stake in the long-distance carrier, based in Ashburn, Va.

Shares of Leucadia, an investor in industries ranging from wine to insurance, fell $1.05 to close at $35.73 Wednesday on the New York Stock Exchange. They have fallen 15 percent since word of SBC's plan to buy AT&T, the biggest U.S. long-distance operator, first leaked last week.

The Jan. 31 announcement of the proposed tie-up cost WilTel access to a $25 million revolving credit facility, Leucadia said. SBC would have to pay WilTel as much as $200 million for terminating their relationship, Leucadia said.

Leucadia spokeswoman Donna Moshe would not comment beyond the filing.

SBC, the second-biggest U.S. local-phone company, began using WilTel's network after it received approval in the past five years to sell long distance voice and data service to corporate and residential customers.

WilTel changed its name in October 2002 after ending a six-month bankruptcy that was caused by declining fiber-optic network prices and debt that ballooned to $7 billion. Leucadia got its equity stake in part by converting $180 million in debt purchased from Williams Cos., the former parent of Williams Communications.