The chief executive officer of disgraced long-distance carrier WorldCom (WCOM) apologized Tuesday for "past transgressions" at the firm and pledged to cooperate with the government's probe into accounting irregularities that totaled nearly $4 billion.

John Sidgmore also said it aimed to develop various funding proposals with its lenders to stave off a possible bankruptcy.

The Clinton, Mississippi-based company, whose network carries about half of the world's Internet traffic, said none of its major customers had canceled contracts and it saw no threat of being shut down.

WorldCom, which has about $2 billion in cash on its books, did not rule out the possibility of bankruptcy, but said its fate remained in the hands of its banks, which have not yet demanded the company immediately repay any of its $30 billion in "junk"-rated debt.

"We are working with banks even as we speak here, talking about various proposals to restructure (our finances). And we are somewhat optimistic that we will get a proposal, if not two proposals, in hand this week to accomplish that," Sidgmore said at a news conference at the National Press Club in Washington, D.C.

TALKS CONTINUE ON $5 BILLION IN FUNDING

The company is in talks for $5 billion in new funding, sources familiar with the situation said. That funding package would replace $2.65 billion in credit it recently drew down, and a $1.6 billion credit line that expires in 2006, and provide about $750,000 to $1 billion of additional credit, sources said.

"We believe that if we get the extra billion of new money, which makes up the critical piece of the $5 billion package, that .... we can make it through a long period of time with that cash and the cash we have on hand now," Sidgmore said.

The company said it has enough cash to meet its near-term expenses, but it may be hard-pressed to meet a $2 billion debt payment in January, said Sidgmore, who took the reins just two months ago after former CEO Bernard Ebbers resigned under a cloud of controversy.

"I don't really see any significant chance of the UUNET network going dark under any circumstance ... I am as confident as I can be that customers are not going to wake up and not have service. I really just don't believe that's possible," Sidgmore said.

WorldCom executives also met Tuesday with Securities and Exchange Commission Chairman Harvey Pitt after the agency blasted as "wholly inadequate and incomplete" a report WorldCom filed on Monday summarizing its accounting problems.

WorldCom, which has been charged by regulators with fraud, said accounting problems could extend as far back as 1999 and 2000, but the nature and extent of any problems remained unclear. It hired an outside expert to investigate the problem, and faces scrutiny by two Congressional committees.

"There remain many open questions, and quite a bit of speculation as to exactly what occurred ... We will release everything we know when we know it," Sidgmore said.

Shares of WorldCom Group, the company's main data and Internet unit, closed Tuesday at 10 cents, up 4 cents, or 67 percent. WorldCom on Tuesday appealed Nasdaq's plan to delist the company's two tracking stocks, a move that was scheduled to occur on Friday.

The New York State comptroller on Tuesday sued WorldCom, some of its officers and directors, as well as its accounting firm, Andersen, because the state's $112 billion pension system lost $300 million in the wake of the accounting scandal.

NETWORK SERVES CRITICAL CLIENTS

Since WorldCom networks transmit data for high-profile clients such as the U.S. State Department and General Services Administration (GSA) as well as the Pentagon, U.S. Department of Defense, Nasdaq, and many of the largest financial firms on Wall Street -- its potential failure cannot be treated lightly, analysts said.

"Bottom line is WorldCom is too important to just pull the plug," said independent telecommunications analyst Jeffrey Kagan.

"WorldCom is not a start-up with a handful of customers. ... They carry so much of the Internet traffic that the Internet would come to a screeching halt. They serve so many businesses that it would create a significant hardship for enterprise customers and federal, state and local government offices they serve," Kagan said.

In fiscal year 2001, the latest figures available, WorldCom had contracts with federal agencies worth a total of $462 million, according Mary Alice Johnson, spokeswoman for GSA.

"Our network does run a number of critical government applications. But I think at the end of the day, I think the chances of us having a major blip in our service level, or in our service provisioning at this point in time, are low under any of the scenarios we've been playing out," said Sidgmore, who added that none of the officials had suggested that WorldCom sell its Internet pipeline, known as UUNet.

MORE JOB CUTS?

The company may need to cut additional jobs on top of the 17,000 layoffs already planned. Also, it aims to sell its wireless resale business, and certain assets in Japan and Latin America. IDT Corp., which has operations ranging from telephone calling cards to to fiber-optic networks, said it offered to acquire WorldCom's MCI long-distance telephone unit and local business units.

Although the company admitted wrongdoing and pledged to correct the accounting sins of the past, it must act quickly to quell the growing controversy to convince its lenders to give it more time and leniency, and convince its corporate customers -- and lifeblood -- to stay, analysts said.

WorldCom, which is the No. 2 U.S. long-distance telephone and data services company and has operations in 65 countries, has some leverage in its discussions, analysts said. If it is forced into bankruptcy, its banks would be forced to stand in line with other creditors to collect their money.

"We know that in a bankruptcy proceeding the banks do far worse than they would do without us in bankruptcy. So that's why ... the banks have become a little bit more positive toward us in the last couple weeks," Sidgmore said.

Reuters and the Associated Press contributed to this report.