NEW YORK (AP) -- WorldCom Inc.'s board of directors has recently discovered that the company engaged in "`massive fraud," overstating its earnings before interest, taxes, depreciation and amortization by $3.6 billion over the last five quarters, according to CNBC.
The company wrongly booked ordinary expenditures as capital expenditures and now plans to restate its financial results to reflect the overstatement of earnings before interest and taxable depreciation, according to CNBC reporter David Faber.
Sources now wonder if the amount of debt the company can carry on its balance sheet have been similarly overstated. The company has been in negotiations with banks, which were made aware earlier on Tuesday about the company's intention to restate its results.
While it is unknown what kind of impact this will have on the company's attempt to obtain new financing, it is sure to make it "very, very difficult" for WorldCom to raise any new money, according to Faber.
CNBC reported that WorldCom's chief financial officer, Scott Sullivan, was dismissed from the company.
