3. Nature of Application

Applicants World Access and Star present a merger agreement wherein World Access will acquire all of the stock of Star and Star will merge with and into "STI Merger Co.," a wholly-owned subsidiary of World Access. As a result, Star will become a wholly-owned subsidiary of World Access and control of Star

will be transferred to World Access. The surviving corporation, STI Merger Co., will continue to operate as Star currently operates, but will do so under new ownership and under the executive control of World Access as parent corporation. Star's three subsidiaries will become wholly-owned subsidiaries of STI Merger Co., with the possible exception of PT-1. As part of the transaction, applicants anticipate the separate sale of PT-1.

Applicants state that upon consummation of this transfer of control, there will be no change in the rates, terms or conditions of service to existing customers of Star. Only the underlying ownership of the company will change.

The applicants have attached a copy of the agreement and plan of merger by and among World Access and Star, and a copy of World Access' most recent Form 10-K filed with the Securities and Exchange Commission. They have also filed under seal a pro forma balance sheet and statement of operations for the combined operations of World Access and Star.

In a footnote to the application, applicants reveal that World Access has also entered into an agreement and plan of merger with Communication TeleSystems International d/b/a/ WorldxChange Communications, Inc. (CTS), which has been separately filed with the Commission as Application (A.) 00-05-059. The application lists a former shareholder of CTS as a future shareholder of World Access upon completion of these two mergers. As a result of Investigation 96-02-043, the Commission issued D.97-05-089 in which it ordered CTS to pay reparations to its subscribers for certain violations of the Public Utilities Code and which made CTS' sanctions, reparations, and operating authority suspension binding on "successor entities." (72 CPUC2d, 621, 643.) The order also directed Commission staff to carefully scrutinize any applications for operating authority submitted by a firm that includes current or former officers or shareholders of CTS. (72 CPUC2d, 621, 641)

In light of this information, the administrative law judge for this matter issued a ruling requesting further information about the nature of the proposed merger with CTS and an explanation of the future involvement of any former CTS officers or shareholders in the corporate structure of World Access.

World Access and Star filed a joint response to this ruling stating that World Access' merger with CTS in A.00-05-059 was a separate and distinct transaction from the merger of World Access and Star in A.00-06-039. According to the response, the surviving corporations after both mergers would be separate corporate entities operated as independent subsidiaries of the parent corporation, World Access. Neither World Access, Star, nor STI Merger Co. should be considered a "successor entity" to CTS. World Access contends that only WorldxChange Communications, Inc. (WorldxChange), would be the successor entity to CTS and that issues surrounding the extension of the CTS sanctions on WorldxChange should be addressed in A.00-05-059. World Access, CTS and Star filed a joint motion for an order referring issues pertaining to the merger of World Access and CTS to A.00-05-059. We will address this motion in Section 5 below.

In addition, applicants filed a motion requesting a shortened time period for filing protests to the application. Given the time that elapsed while awaiting response to the administrative law judge ruling discussed above, this motion is now moot.