US LEC Recapitalizes the Company and Reaches Favorable Agreement Regarding Outstanding Obligation

Apr 02, 2001, 01:00 ET from US LEC Corp.

    CHARLOTTE, April 2 /PRNewswire/ -- US LEC Corp. (Nasdaq:   CLEC) announced
 today it has reached an agreement to resolve the outstanding obligation from
 Metacomm, LLC.
     The Company, Richard T. Aab, US LEC's chairman and controlling shareholder
 and the indirect controlling owner of Metacomm, and Tansukh V. Ganatra, US
 LEC's vice chairman and chief executive officer, reached an agreement in
 principle to effect a recapitalization of the Company and to resolve Mr. Aab's
 commitment that Metacomm would satisfy its obligations to the Company for
 facilities, advances and interest.
     The obligation is made up of advances and receivables for services to
 Metacomm for $21 million and $15 million, respectively, plus accrued interest.
 Due to an unfavorable ruling on March 31, 2000 by the North Carolina Utilities
 Commission ("NCUC") regarding reciprocal compensation, Metacomm was unable to
 meet its obligations to US LEC.  Mr. Aab has continued to work with US LEC's
 audit committee to resolve the issue.  The audit committee has agreed to an
 arrangement with Metacomm that provides for Mr. Aab, on behalf of Metacomm, to
 surrender 2 million shares of US LEC Class B common stock.  In addition, all
 remaining shares of Class B Stock held by Mr. Aab (approximately 11 million)
 and Mr. Tansukh Ganatra, the Company's vice chairman and CEO (approximately
 4 million) will be converted to Class A common stock.  Currently the Class B
 shares have 10 voting rights per share, and the holders of the Class B Stock
 (Mr. Aab and Mr. Ganatra) are allowed to elect two Class B directors to the
 board of directors of US LEC.  Following the closing of the transaction, no
 shares of Class B common stock will be outstanding and none may be re-issued.
 The closing of the transaction is subject to consent by the holders of
 US LEC's preferred stock, Bain Capital and T. H. Lee, which has been given, as
 well as the Company's senior lenders and a third party valuation of the
 transaction.
     Mr. Steven L. Schoonover, chairman of the audit committee of US LEC,
 commented, "We are very pleased to conclude a successful agreement with
 Metacomm and Mr. Aab.  One year ago, Mr. Aab agreed to stand by Metacomm's
 obligations.  This commitment to US LEC is indicative of Mr. Aab's strong
 desire to see US LEC continue to grow as a leading company in the
 telecommunications arena."
     Mr. Richard T. Aab said, "I appreciate the diligence with which US LEC's
 audit committee worked to resolve this matter.  With the enormous decline in
 the equity markets, and the telecommunications sector specifically, the
 committee, our board and I have reached a solution that we believe is very
 positive for US LEC's shareholders.  My surrender of 2 million shares, out of
 28 million common shares outstanding, increases the ownership of each of our
 shareholders.  In addition, the conversion of my and Mr. Ganatra's Class B
 Shares to Class A represents an important step in our evolution from a 1996
 start up to the strong public Company we are today.  Our capital structure is
 now made up of the founders, common and preferred shareholders, and our senior
 lenders, each of whom play a key role in our financial strength."
     Continuing, Mr. Aab said, " US LEC is positioned among the best in our
 sector.  The execution of our plan has been outstanding, and I believe having
 this issue resolved along with the conversion of the Class B to Class A Common
 stock will enable the Company's board and management team to make US LEC the
 company Mr. Ganatra and I envisioned 5 years ago.  Our core revenue continues
 to grow, our network and customer base are expanding, and we remain focused on
 achieving positive EBITDA."
     The audit committee of US LEC is made up of all four outside directors,
 and the agreement rendered received unanimous consent of the outside
 directors.  The closing of this transaction is expected to be concluded prior
 to May 30, 2001, pending any required approvals and a valuation of the
 transaction by a third party.  This transaction will not affect the Company's
 May 3, 2001 Annual Shareholder Meeting.
    US LEC currently offers local, long distance, data, Internet and enhanced
 services to customers in Alabama, Florida, Georgia, Kentucky, Louisiana,
 Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina,
 Tennessee, Virginia and Washington D.C.  In addition, US LEC is currently
 certified to provide telecommunications services in Connecticut, Delaware,
 Indiana, Massachusetts, New Jersey, New York, Ohio and Texas.  US LEC's
 network is currently comprised of 23 Lucent 5ESS(R) AnyMedia(TM) digital
 switches, 17 Lucent CBX500 ATM switches, and an Alcatel MegaHub(R) 600ES
 switch in Charlotte.  The Company primarily serves
 telecommunications-intensive customers such as businesses, universities,
 financial institutions, professional service firms, hospitals, Internet
 service providers, hotels, and government agencies. US LEC can be found on the
 World Wide Web at www.uslec.com .
 
     Except for the historical information contained herein, this news release
 contains forward-looking statements, subject to uncertainties and risks,
 including the demand for US LEC's services, the ability of the Company to
 introduce additional products, the ability of the Company to successfully
 attract and retain personnel, competition, uncertainties regarding its
 dealings with ILECs, and other telecommunications carriers and facilities
 providers, and regulatory uncertainties, and the possibility of an adverse
 decision related to or uncollectability of reciprocal compensation owing to
 the Company by BellSouth, as well as the Company's ability to begin operations
 in additional markets.  These and other applicable risks are summarized in the
 "Forward-Looking Statements and Risk Factors" section and elsewhere in the
 Company's annual report on Form 10-K, as amended, for the period ended
 December 31, 1999, and in other reports which are on file with the Securities
 and Exchange Commission.
 
     CONTACT:  Investor Contact, James Stawski, 704-319-1189, or
               jstawski@uslec.com, or Media Contact, Jennifer Sharpe,
               704-319-1135, or jsharpe@uslec.com, or Corporate Contact,
               Linda Healy Vespa, 704-319-1132, or lvespa@uslec.com, all of
               US LEC
 
 

SOURCE US LEC Corp.
    CHARLOTTE, April 2 /PRNewswire/ -- US LEC Corp. (Nasdaq:   CLEC) announced
 today it has reached an agreement to resolve the outstanding obligation from
 Metacomm, LLC.
     The Company, Richard T. Aab, US LEC's chairman and controlling shareholder
 and the indirect controlling owner of Metacomm, and Tansukh V. Ganatra, US
 LEC's vice chairman and chief executive officer, reached an agreement in
 principle to effect a recapitalization of the Company and to resolve Mr. Aab's
 commitment that Metacomm would satisfy its obligations to the Company for
 facilities, advances and interest.
     The obligation is made up of advances and receivables for services to
 Metacomm for $21 million and $15 million, respectively, plus accrued interest.
 Due to an unfavorable ruling on March 31, 2000 by the North Carolina Utilities
 Commission ("NCUC") regarding reciprocal compensation, Metacomm was unable to
 meet its obligations to US LEC.  Mr. Aab has continued to work with US LEC's
 audit committee to resolve the issue.  The audit committee has agreed to an
 arrangement with Metacomm that provides for Mr. Aab, on behalf of Metacomm, to
 surrender 2 million shares of US LEC Class B common stock.  In addition, all
 remaining shares of Class B Stock held by Mr. Aab (approximately 11 million)
 and Mr. Tansukh Ganatra, the Company's vice chairman and CEO (approximately
 4 million) will be converted to Class A common stock.  Currently the Class B
 shares have 10 voting rights per share, and the holders of the Class B Stock
 (Mr. Aab and Mr. Ganatra) are allowed to elect two Class B directors to the
 board of directors of US LEC.  Following the closing of the transaction, no
 shares of Class B common stock will be outstanding and none may be re-issued.
 The closing of the transaction is subject to consent by the holders of
 US LEC's preferred stock, Bain Capital and T. H. Lee, which has been given, as
 well as the Company's senior lenders and a third party valuation of the
 transaction.
     Mr. Steven L. Schoonover, chairman of the audit committee of US LEC,
 commented, "We are very pleased to conclude a successful agreement with
 Metacomm and Mr. Aab.  One year ago, Mr. Aab agreed to stand by Metacomm's
 obligations.  This commitment to US LEC is indicative of Mr. Aab's strong
 desire to see US LEC continue to grow as a leading company in the
 telecommunications arena."
     Mr. Richard T. Aab said, "I appreciate the diligence with which US LEC's
 audit committee worked to resolve this matter.  With the enormous decline in
 the equity markets, and the telecommunications sector specifically, the
 committee, our board and I have reached a solution that we believe is very
 positive for US LEC's shareholders.  My surrender of 2 million shares, out of
 28 million common shares outstanding, increases the ownership of each of our
 shareholders.  In addition, the conversion of my and Mr. Ganatra's Class B
 Shares to Class A represents an important step in our evolution from a 1996
 start up to the strong public Company we are today.  Our capital structure is
 now made up of the founders, common and preferred shareholders, and our senior
 lenders, each of whom play a key role in our financial strength."
     Continuing, Mr. Aab said, " US LEC is positioned among the best in our
 sector.  The execution of our plan has been outstanding, and I believe having
 this issue resolved along with the conversion of the Class B to Class A Common
 stock will enable the Company's board and management team to make US LEC the
 company Mr. Ganatra and I envisioned 5 years ago.  Our core revenue continues
 to grow, our network and customer base are expanding, and we remain focused on
 achieving positive EBITDA."
     The audit committee of US LEC is made up of all four outside directors,
 and the agreement rendered received unanimous consent of the outside
 directors.  The closing of this transaction is expected to be concluded prior
 to May 30, 2001, pending any required approvals and a valuation of the
 transaction by a third party.  This transaction will not affect the Company's
 May 3, 2001 Annual Shareholder Meeting.
    US LEC currently offers local, long distance, data, Internet and enhanced
 services to customers in Alabama, Florida, Georgia, Kentucky, Louisiana,
 Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina,
 Tennessee, Virginia and Washington D.C.  In addition, US LEC is currently
 certified to provide telecommunications services in Connecticut, Delaware,
 Indiana, Massachusetts, New Jersey, New York, Ohio and Texas.  US LEC's
 network is currently comprised of 23 Lucent 5ESS(R) AnyMedia(TM) digital
 switches, 17 Lucent CBX500 ATM switches, and an Alcatel MegaHub(R) 600ES
 switch in Charlotte.  The Company primarily serves
 telecommunications-intensive customers such as businesses, universities,
 financial institutions, professional service firms, hospitals, Internet
 service providers, hotels, and government agencies. US LEC can be found on the
 World Wide Web at www.uslec.com .
 
     Except for the historical information contained herein, this news release
 contains forward-looking statements, subject to uncertainties and risks,
 including the demand for US LEC's services, the ability of the Company to
 introduce additional products, the ability of the Company to successfully
 attract and retain personnel, competition, uncertainties regarding its
 dealings with ILECs, and other telecommunications carriers and facilities
 providers, and regulatory uncertainties, and the possibility of an adverse
 decision related to or uncollectability of reciprocal compensation owing to
 the Company by BellSouth, as well as the Company's ability to begin operations
 in additional markets.  These and other applicable risks are summarized in the
 "Forward-Looking Statements and Risk Factors" section and elsewhere in the
 Company's annual report on Form 10-K, as amended, for the period ended
 December 31, 1999, and in other reports which are on file with the Securities
 and Exchange Commission.
 
     CONTACT:  Investor Contact, James Stawski, 704-319-1189, or
               jstawski@uslec.com, or Media Contact, Jennifer Sharpe,
               704-319-1135, or jsharpe@uslec.com, or Corporate Contact,
               Linda Healy Vespa, 704-319-1132, or lvespa@uslec.com, all of
               US LEC
 
 SOURCE  US LEC Corp.