The law firm of Milberg Weiss Bershad Hynes & Lerach LLP said it filed a class action lawsuit Tuesday on behalf of stockholders of Williams Companies, Inc. and/or Williams Communications Group, Inc. (WCG), alleging the companies made “material misrepresentations to the markets” between July 24, 2000 and Jan. 29, 2002. The actions served to inflate the price of the two companies common stock, the attorneys said.

The complaint also names Williams Chairman Keith E. Bailey, WCG’s Chairman Howard E. Janzen and CFO Scott E. Schubert. The suit was filed in the United States District Court for the Northern District of Oklahoma :

The Complaint alleges that Williams and its communications offshoot failed to disclose:

(1) that the spin-off of WCG from Williams was not in stockholders best interests, but was aimed at “allowing Williams to shore up its balance sheet so it could issue more stock and/or debt to acquire companies using its common stock as currency and protect its debt rating;

(2) “that WCG was operating at levels well below expectations, such that revenue projections were overstated, and costs and expenses were understated, and also such that, in an effort to control costs, defendants would soon have to take actions which would have a further adverse impact on WCG’s profitability;

(3)” that approximately $2 billion of WCG debt that was guaranteed for payment by Williams around the time of the spin-off was improperly footnoted as a mere contingent obligation of Williams, which was materially false and misleading because the declining financial condition of WCG made it increasingly certain that Williams would be forced to pay on such guaranties, for which it did not adequately reserve;

(4) “that WCG’s assets were permanently impaired and had to be written-off and that WCG avoided taking such write-offs on its own books through the series of financial machinations described in the complaint;

(5) “that Williams was carrying on its financial statements, receivables from WCG that were impaired, uncollectible and should have been written-off in whole or in substantial part. Rather than writing off these impaired assets, which amounted to tens of millions of dollars, WMB agreed to extend up to $100 million of WCG’s receivables with an outstanding balance due on March 31, 2001, to March 15, 2002; and

(6) “that the sale and leaseback of WCG’s office properties in or about September of 2001 was a non-arm’s-length transaction at an inflated value for the properties whose motive and intent was to funnel monies to WCG and avoid forcing Williams to perform its guaranties and thereby adversely affect its results and debt ratings.”

The complaint can be viewed at https://www.milberg.com/williamscompanies/.

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