Educational Funding of the South, Inc. Announces Tender Offer

KNOXVILLE, Tenn., April 20 /PRNewswire/ -- Educational Funding of the South, Inc. ("Edsouth"), today announced that it has commenced a tender offer with respect to the following outstanding Educational Loan Revenue Bonds of Edsouth:

The tender offer is part of a plan by Edsouth to refinance student loans securing its auction rate bonds.  The tender will expire at 11:59 p.m. New York City time, on May 17, 2010 unless extended or earlier terminated by Edsouth.  Edsouth's obligation to purchase auction rate bonds in the tender offer is subject to the terms and conditions set forth in the offer to purchase dated April 20, 2010 (the "Offer to Purchase").  The Offer to Purchase can be found on Edsouth's website at www.edsouth.org/investors/tenderoffer1993indenture.  

A bondholder may tender auction rate bonds of any series it owns and at a price of its choosing, pursuant to the terms of the tender offer.  If validly tendered auction rate bonds of any series are accepted for payment, Edsouth will pay a total cash consideration for such accepted auction rate bonds equal to a single price (the applicable "Clearing Price") for such series of auction rate bonds to be purchased in whole or in part plus accrued and unpaid interest on the principal amount thereof from the last applicable interest payment date to, but not including, the settlement date.

In determining the Clearing Price for each series of auction rate bonds that will be purchased, Edsouth intends to follow a "Modified Dutch Auction" procedure. Edsouth will determine, in its sole discretion, the aggregate principal amount of auction rate bonds in any series that Edsouth will purchase.  Edsouth has sole and absolute discretion to accept for purchase or reject any validly tendered auction rate bonds, and may use any selection process it chooses, without prior notification to bondholders, to determine which auction rate bonds, if any, it will select for purchase.  Notwithstanding the foregoing, Edsouth intends to follow certain criteria specified in the Offer to Purchase in making such determination.  Edsouth expects to select tenders for any series at the lowest price first and to continue to accept offers at prices in ascending order until it has selected the amount of auction rate bonds of such series that it has determined to purchase.  The Clearing Price for any series will be the highest price for any auction rate bonds of that series that are accepted for purchase by Edsouth.  The same Clearing Price will apply to all auction rate bonds of any series to the extent that Edsouth determines to purchase any auction rate bonds of such series.

Edsouth may, in its sole discretion, accept for purchase less than all of the tendered auction rate bonds of any series.  Edsouth may also decline to purchase any auction rate bonds of one or more series, even if it is purchasing auction rate bonds of any other series and may purchase some series at higher Prices than other series.

None of Edsouth, the trustee, the student loan purchaser, the depositary, the dealer manager, the information agent or any of their respective affiliates makes any recommendation as to whether bondholders should tender their auction rate bonds pursuant to the tender offer.  Each bondholder must make its own decision with regard to tendering its auction rate bonds pursuant to the tender offer.

D.F. King & Co., Inc. will act as the information agent and depositary.  Bondholders or their representatives may request copies of the Offer to Purchase and related documents, and submit any questions or requests for assistance to:

This press release is not an offer to purchase, a solicitation of an offer to purchase or a solicitation of an offer to sell any of the auction rate bonds.  The tender offer may only be made pursuant to the terms of the Offer to Purchase.  The Offer to Purchase contains important information that should be read carefully in its entirety before any decision is made to tender or not tender auction rate bonds pursuant to the tender offer.

About Educational Funding of the South, Inc.

Edsouth is a nonprofit, public-benefit corporation created in 1985 under the law of the State of Tennessee, organized for the purpose of promoting access to higher education by acquiring postsecondary education loans under Title IV of the Federal Higher Education Act of 1965.  Edsouth received its 501(c)(3) determination and operates as a 150(d) corporation in the states of Tennessee and Florida.  Its principal office is located at 104 North Seven Oaks Drive, Knoxville, Tennessee 37922.  Prior to January 1, 1996, Edsouth was known as Volunteer State Student Funding Corporation.  Edsouth has implemented various programs to assist eligible borrowers in financing the costs of post-secondary education at eligible schools, colleges and universities.  In addition to educational funding, Edsouth has several student outreach initiatives for the purpose of increasing awareness of college, career, and financial aid opportunities by providing free college and career planning resources and services for students and parents.

Forward-Looking Statements

Forward-looking statements in this release, such as the scheduled expiration of the tender offer, are based on current expectations.  This press release contains forward-looking statements that involve a variety of business risks and other uncertainties that could cause actual results to differ materially.  Words such as "expects," "intends," "plans," "projects," "believes," "estimates" and similar expressions are used to identify these forward-looking statements.  These statements are not guarantees of future performance and involves risks, uncertainties, and assumptions that are difficult to predict.  Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate.  Actual outcomes and results may differ materially from what is expressed or forecast in these forward-looking statements.  Forward-looking statements speak only as of the date made.  There is no obligation to update any forward-looking statements to reflect the events or circumstances arising after the date as of which they are made.  As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on the forward-looking statements included in this release or that may be made elsewhere from time to time by, or on behalf of, Edsouth.

SOURCE Educational Funding of the South, Inc.