Rhythms NetConnections Engages Investment Banker to Explore Strategic And Financial Options

Apr 02, 2001, 01:00 ET from Rhythms NetConnections Inc.

    ENGLEWOOD, Colo., April 2 /PRNewswire/ -- Rhythms NetConnections Inc.(TM)
 (Nasdaq:   RTHM), an international provider of broadband communication services,
 announced today that it has engaged Lazard Freres & Co. LLC, a leading
 investment banking firm, to assist in evaluating a broad range of strategic
 and financial options.
     These options include, but are not limited to, a sale of the Company, a
 strategic transaction, joint venture or partnership with a financial,
 strategic or industry partner or other similar transaction, a debt and/or
 equity financing or restructuring, a public or private sale of debt or equity
 securities or assets, and/or an acquisition, merger, consolidation,
 reorganization, recapitalization or other business combination.  The
 engagement of Lazard Freres was reported in Rhythms' Form 10-K for fiscal year
 2000 (the "10-K"), which was filed today with the Securities and Exchange
 Commission.  A copy of Rhythms' Form 10-K is available at www.freeedgar.com.
     Among other matters reported in the filing, Rhythms said The Nasdaq Stock
 Market, Inc. (Nasdaq) has informed Rhythms of its intent to issue a formal
 notice to delist the Company's common stock from the Nasdaq National Market
 (National Market) because of Rhythms' failure to satisfy (1) the $4 million
 net tangible asset continued listing requirement for a National Market issuer
 with a per share stock price of at least $1.00 or (2) the $5.00 minimum per
 share stock price alternative continued listing requirement for a National
 Market issuer who fails to satisfy the net tangible assets requirement.
 Rhythms has not yet received a formal delisting notice and has not decided
 whether it will appeal such notice.
     The Company also reported in its 10-K that PricewaterhouseCoopers LLP,
 Rhythms' independent accountants, has prepared a report on the Company's
 financial condition that includes a "going concern" opinion.
     With respect to other operational and financial matters, the Company
 reported in its 10-K that:
 
     -- It currently has enough cash on hand and available lease financing to
        fund its operational requirements through this year and into January
        2002.
 
     -- It continues to grow its subscriber base, including as previously
        reported, a 43% sequential quarter increase in subscriber lines in
        service for the 2000 fourth quarter.
 
     About Rhythms
     Based in Englewood, Colo., Rhythms NetConnections Inc. (Nasdaq:   RTHM)
 provides DSL-based, broadband communication services to businesses and
 consumers.  Telecommunications services for Rhythms are provided by Rhythms
 Links Inc., a wholly owned subsidiary of Rhythms.  For more information, call
 1-800-RHYTHMS (1-800-749-8467), or visit the company's Web site at
 www.rhythms.com.
 
     Rhythms, Rhythms NetConnections and (any product names for which trademark
 applications have been filed) are trademarks of Rhythms NetConnections Inc.
 
     The statements contained in these materials which are not historical facts
 may contain forward-looking statements with respect to events, the occurrence
 of which involve risks and uncertainties.  Such statements are indicated by
 words or phrases such as "anticipate," "estimate," "projects," "believes,"
 "intends," "expects" and similar words and phrases.  The following are
 important factors that could cause Rhythms' actual results to differ
 materially from those expressed or implied by such forward looking statements:
 the highly competitive nature of the DSL market; the rapid rate of
 technological change in the telecommunications industry; Rhythms' history of
 operating losses and the unproven nature of its business model; customer
 agreements are generally non-exclusive and terminable by the customer on short
 notice; several customers are young, emerging companies that are not fully
 funded;  Rhythms' existing capital structure may affect its ability to raise
 additional capital or to service its existing debt and preferred stock
 obligations in the future; Rhythms' dependence on incumbent carriers for
 collocation and transmission facilities and on unrelated strategic third
 parties for certain sales and marketing services, equipment installation and
 fiber optic transport facilities; the need to retain and attract key
 personnel; and other economic, business, competitive and governmental and/or
 regulatory risks detailed in Rhythms' filings with the Securities and Exchange
 Commission.  Rhythms undertakes no obligation to review or confirm analysts'
 expectations or estimates or to release publicly any revisions to any forward-
 looking statements after the date hereof or to reflect the occurrence of
 unanticipated events.
 
 

SOURCE Rhythms NetConnections Inc.
    ENGLEWOOD, Colo., April 2 /PRNewswire/ -- Rhythms NetConnections Inc.(TM)
 (Nasdaq:   RTHM), an international provider of broadband communication services,
 announced today that it has engaged Lazard Freres & Co. LLC, a leading
 investment banking firm, to assist in evaluating a broad range of strategic
 and financial options.
     These options include, but are not limited to, a sale of the Company, a
 strategic transaction, joint venture or partnership with a financial,
 strategic or industry partner or other similar transaction, a debt and/or
 equity financing or restructuring, a public or private sale of debt or equity
 securities or assets, and/or an acquisition, merger, consolidation,
 reorganization, recapitalization or other business combination.  The
 engagement of Lazard Freres was reported in Rhythms' Form 10-K for fiscal year
 2000 (the "10-K"), which was filed today with the Securities and Exchange
 Commission.  A copy of Rhythms' Form 10-K is available at www.freeedgar.com.
     Among other matters reported in the filing, Rhythms said The Nasdaq Stock
 Market, Inc. (Nasdaq) has informed Rhythms of its intent to issue a formal
 notice to delist the Company's common stock from the Nasdaq National Market
 (National Market) because of Rhythms' failure to satisfy (1) the $4 million
 net tangible asset continued listing requirement for a National Market issuer
 with a per share stock price of at least $1.00 or (2) the $5.00 minimum per
 share stock price alternative continued listing requirement for a National
 Market issuer who fails to satisfy the net tangible assets requirement.
 Rhythms has not yet received a formal delisting notice and has not decided
 whether it will appeal such notice.
     The Company also reported in its 10-K that PricewaterhouseCoopers LLP,
 Rhythms' independent accountants, has prepared a report on the Company's
 financial condition that includes a "going concern" opinion.
     With respect to other operational and financial matters, the Company
 reported in its 10-K that:
 
     -- It currently has enough cash on hand and available lease financing to
        fund its operational requirements through this year and into January
        2002.
 
     -- It continues to grow its subscriber base, including as previously
        reported, a 43% sequential quarter increase in subscriber lines in
        service for the 2000 fourth quarter.
 
     About Rhythms
     Based in Englewood, Colo., Rhythms NetConnections Inc. (Nasdaq:   RTHM)
 provides DSL-based, broadband communication services to businesses and
 consumers.  Telecommunications services for Rhythms are provided by Rhythms
 Links Inc., a wholly owned subsidiary of Rhythms.  For more information, call
 1-800-RHYTHMS (1-800-749-8467), or visit the company's Web site at
 www.rhythms.com.
 
     Rhythms, Rhythms NetConnections and (any product names for which trademark
 applications have been filed) are trademarks of Rhythms NetConnections Inc.
 
     The statements contained in these materials which are not historical facts
 may contain forward-looking statements with respect to events, the occurrence
 of which involve risks and uncertainties.  Such statements are indicated by
 words or phrases such as "anticipate," "estimate," "projects," "believes,"
 "intends," "expects" and similar words and phrases.  The following are
 important factors that could cause Rhythms' actual results to differ
 materially from those expressed or implied by such forward looking statements:
 the highly competitive nature of the DSL market; the rapid rate of
 technological change in the telecommunications industry; Rhythms' history of
 operating losses and the unproven nature of its business model; customer
 agreements are generally non-exclusive and terminable by the customer on short
 notice; several customers are young, emerging companies that are not fully
 funded;  Rhythms' existing capital structure may affect its ability to raise
 additional capital or to service its existing debt and preferred stock
 obligations in the future; Rhythms' dependence on incumbent carriers for
 collocation and transmission facilities and on unrelated strategic third
 parties for certain sales and marketing services, equipment installation and
 fiber optic transport facilities; the need to retain and attract key
 personnel; and other economic, business, competitive and governmental and/or
 regulatory risks detailed in Rhythms' filings with the Securities and Exchange
 Commission.  Rhythms undertakes no obligation to review or confirm analysts'
 expectations or estimates or to release publicly any revisions to any forward-
 looking statements after the date hereof or to reflect the occurrence of
 unanticipated events.
 
 SOURCE  Rhythms NetConnections Inc.