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NuVox Communications Secures $78.5 Million of Additional Funding

Submitted by: John Warner on Aug 14, 2002 at 5:00 am Tagged with: General Archives Source:

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NuVox Communications Secures $78.5 Million of Additional Funding

Business Editors/High Tech Writers

ST. LOUIS--(BUSINESS WIRE)--Aug. 14, 2002--NuVox Communications, a rapidly
growing, facilities-based broadband services provider, announced today that it
has raised $78.5 million of additional capital to finance its operations.
A total of $66 million of additional equity funding was provided by
existing investors including private equity funds associated with Goldman Sachs
& Co., JP Morgan Partners, Whitney & Co., Meritage Private Equity Fund,
Richland Ventures, BancAmerica Capital Investors, Centennial Funds, Norwest
Equity Partners, Boston Millenia Partners and Flagship Ventures. General
Electric Capital Corporation and CIT Lending Services Corporation provided
$12.5 million of additional debt financing.
"The continuing prolonged downturn in private and public equity markets and
challenging operating environment for emerging telecommunications companies has
forced many companies in our industry into bankruptcy," said David L. Solomon,
Chairman and Chief Executive Officer of NuVox. "In this environment, it is a
strong endorsement of our business strategy, management team and committed
employees that we have been able to attract this meaningful amount of
additional capital to fund NuVox's continued development."
The additional equity and debt financing is part of NuVox's revised
financial plan under which approximately $160.5 million of obligations under
its previous credit facility have been repaid with cash payments totaling
approximately $23.2 million and the issuance of shares of NuVox convertible
preferred stock representing 8.24% of total equity. NuVox also adopted
revisions to its business plan that include reductions in operating and capital
costs and a decrease in the amount of cash that NuVox estimates will be
required to fund its operations to positive free cash flow.
With these steps, NuVox's total outstanding long-term debt under its credit
facility has been reduced to $26.3 million principal amount of senior secured
notes due 2006 and a junior unsecured discount note due 2008 with an initial
accreted value of $10.3 million and an accreted value at maturity of $21.7
million. On a pro forma basis as of June 30, 2002, giving effect to the
additional financing and repayment of outstanding indebtedness, NuVox's cash
and cash equivalents totalled approximately $65.5 million. NuVox estimates that
this amount will be sufficient to fully fund its operations in accordance with
its revised business plan.
Through June 30, 2004, interest on the senior secured notes will be payable
through issuance of additional senior secured notes and thereafter will be
payable in cash at LIBOR plus 4.25%. Principal on the senior secured notes is
payable 30% in quarterly installments during the period from June 30, 2004
through June 30, 2006 and 70% on September 30, 2006.
Michael R. Hannon, Partner of JP Morgan Partners, said, "We believe the
current financial turmoil affecting emerging telecommunications companies
presents significant opportunities for investments in best managed, well
capitalized companies. NuVox has been able to post solid high-growth results
despite a declining economic environment and difficult capital market
conditions. Our investing group believes that NuVox is well positioned to
capture significant market share by virtue of its strong customer focus, proven
provisioning capabilities and attractively priced service packages."
NuVox provides reliable, integrated communications services to
approximately 15,000 on-net business customers in 30 markets in 13 contiguous
states across the Midwest and Southeast United States. NuVox ended the second
quarter of 2002 with $139 million of annualized revenues (a 70 percent
year-to-year increase) and all of its 30 markets reporting positive gross
margins. Annualized broadband revenues increased 110 percent from $58 million
and 71 percent of total revenues in June 2001 to $122 million and 88 percent of
total revenues in June 2002. Core broadband revenues include revenues from
NuVox's Broadband Bundle, an integrated local, long distance, and high-speed
Internet access product, and its broadband data communications services.
"The additional funding we have secured today will enable us to continue to
invest in the development of our markets and allows for demand-driven spending
as we add customers," said Mike Cassity, President and Chief Operating Officer
of NuVox. "We expect this additional financial support will enable us to
achieve our objectives of becoming EBITDA positive by the fourth quarter of
this year and attaining positive free cash flow before the end of 2003."

Q Consulting LLC has acted as NuVox's financial advisor in connection with
the debt financing.

About NuVox Communications

NuVox Communications is the integrated communications provider of choice,
delivering superior broadband services and customer care to business customers
in 30 markets in 13 Southeast and Midwest states. NuVox offers businesses and
other end-users advanced integrated voice, data and Internet products and
services. The Company provides dedicated and dial-up high-speed Internet
access; Web page design, development and hosting; "traditional" local and long
distance telephone services; and unified voice, e-mail, and fax messaging as
well as advanced data services. NuVox's growing product portfolio also includes
LAN and WAN management, virtual private networks, audio conferencing and remote
access. NuVox provides its integrated voice and data services to approximately
15,000 on-net customers with approximately 210,000 on-net access lines in
service. NuVox, Inc. is privately held, and its headquarters are located at
16090 Swingley Ridge Road, Suite 500, in Chesterfield, MO 63017. The NuVox
Communications Web site URL is www.nuvox.com.

Forward-Looking Statements

Some of the statements contained in this press release that are not
historical facts are "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and are subject to known and
unknown risks, uncertainties and other factors that could cause actual results
to differ materially from those contemplated by these statements. These
forward-looking statements are based on various factors and have been derived
using numerous assumptions. These forward-looking statements generally can be
identified by the use of forward-looking terminology such as "will," "may,"
"should," "believe," "intend," "expect," "anticipate," "project," "estimate" or
"predict" or the negative thereof or other variations thereon or comparable
terminology. NuVox wishes to caution readers of this press release that these
forward-looking statements regarding matters that are not historical facts are
only our predictions, assumptions and estimates regarding future events and
circumstances. Accordingly, NuVox can give no assurance that these predictions
and estimates will be realized. Actual events or results may differ materially
as a result of risks and uncertainties facing us, including risks and
uncertainties regarding the continued development of our business and the
markets for our services and products, the negative impacts of the downturn in
the economy and the sufficiency of our capital.

--30--CG/ch*

CONTACT: NuVox Communications, St. Louis
Randy McDougald, 864/331-8133, rmcdougald@nuvox.com

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SOURCE: NuVox Communications