(CHOICE ONE COMMUNICATIONS LOGO)
EXHIBIT 99.1
CHOICE ONE CONTACT:
Xxxx Xxxxxx
Executive Vice President
Phone: (000) 000-0000
xxxxxxx@xxxxxxxxxxxx.xxx
CHOICE ONE COMMUNICATIONS HAS AGREEMENT IN PRINCIPLE
ON TERMS OF A FINANCIAL RESTRUCTURING
ROCHESTER, New York - Aug. 2, 2004 - Choice One Communications (OTCBB:
CWON):
- Reaches agreement in principle with ad hoc committees of its senior
and subordinated lenders on the key terms for a financial
restructuring
- Financial restructuring would substantially reduce Company's debt,
strengthen its balance sheet, and increase its liquidity
- Normal operations expected to continue throughout restructuring
process
- All client services expected to continue without interruption
- It is anticipated that the financial restructuring will be
accomplished through "prepackaged" or prearranged chapter 11
proceeding and completed by year end
Choice One Communications (OTCBB: CWON), an Integrated Communications
Provider offering facilities-based voice and data telecommunications services,
including Internet solutions, to clients in 29 Northeast and Midwest markets,
today announced it has reached an agreement in principle with ad hoc committees
of its senior and subordinated lenders to restructure and substantially reduce
the Company's debt, strengthen its balance sheet, and increase its liquidity.
"Choice One is strategically focused and operationally strong," said Xxxxx
Xxxxxx, Chairman and Chief Executive Officer. "But our debt level today is out
of line with our current business model. We need to fix that, and that is what
this financial restructuring is intended to do. It will enhance our ability to
meet the needs of our clients and continue to execute our strategy."
The Company expects to continue normal operations throughout the
restructuring process. All services provided to clients are expected to continue
on a "business as usual" basis.
In addition to debt reduction, the proposed restructuring -- which has the
support of ad hoc committees of the Company's senior and subordinated lenders --
will increase the Company's liquidity.
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CHOICE ONE AGREEMENT IN PRINCIPLE ON TERMS OF FINANCIAL RESTRUCTURING
It is currently anticipated that (i) the Company's approximately $404
million of outstanding senior debt would be converted into $175 million of new
senior secured term notes payable over six years and 90% of the common stock of
the reorganized Company; (ii) the Company's approximately $252 million of
outstanding subordinated debt would be converted into the other 10% of such
common stock and into two series of seven-year warrants to purchase additional
shares of common stock from the reorganized Company; and (iii) upon completion
of the restructuring, the Company would obtain a revolving credit facility of up
to $25 million from a subset of its senior lenders to provide for ongoing
working capital requirements.
It is anticipated that the restructuring would be implemented through a
so-called "prepackaged" or prearranged chapter 11 proceeding, which is designed
to be completed promptly with minimal disruption to the Company's business and
without affecting the provision of the Company's services to its clients. To
ensure the continued stability of the Company's management, certain restricted
stock and/or stock option grants would be made in amounts and subject to
conditions thereon to be determined. It is expected that the Company's existing
preferred and common stockholders would not receive any recovery.
To facilitate the negotiation of the financial restructuring, the
requisite majority of both its senior and subordinated lenders have agreed to
standstill agreements, subject to certain conditions, pursuant to which they
will not take any action before August 30, 2004 with respect to the Company's
failure to make certain payments on the senior debt that were due on July 30,
2004. This will provide the Company with the flexibility to postpone its
interest and amortization payments until August 30, 2004, and thereby with
additional short-term liquidity. There can be no assurance that the Company's
financial restructuring will be successfully completed.
Xx. Xxxxxx said: "This agreement in principle is an important first step
in the financial restructuring of the Company. With a strengthened balance
sheet, increased liquidity, $320 million in recurring revenue, and more than
100,000 clients on our network, Choice One will be well-positioned to be a
leading communications company in the markets we serve."
ABOUT CHOICE ONE COMMUNICATIONS
Headquartered in Rochester, New York, Choice One Communications Inc.
(OTCBB: CWON) is a leading Integrated Communications Provider offering voice and
data services including Internet solutions, to businesses in 29 metropolitan
areas (markets) across 12 Northeast and Midwest states. Choice One reported $323
million of revenue in 2003, has more than 100,000 clients and employs
approximately 1,400 colleagues.
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CHOICE ONE AGREEMENT IN PRINCIPLE ON TERMS OF FINANCIAL RESTRUCTURING
Choice One's markets include: Hartford and New Haven, Connecticut;
Rockford, Illinois; Bloomington/Evansville, Fort Xxxxx, Indianapolis, South
Bend/Elkhart, Indiana; Springfield and Worcester, Massachusetts;
Portland/Augusta, Maine; Grand Rapids and Kalamazoo, Michigan;
Manchester/Portsmouth, New Hampshire; Albany (including Kingston, Newburgh,
Plattsburgh and Poughkeepsie), Buffalo, Rochester and Syracuse (including
Binghamton, Elmira and Watertown), New York; Akron (including Youngstown),
Columbus and Dayton, Ohio; Allentown, Erie, Harrisburg, Pittsburgh and
Xxxxxx-Xxxxx/Scranton, Pennsylvania; Providence, Rhode Island; Green Bay
(including Appleton and Oshkosh), Madison and Milwaukee, Wisconsin.
The Company has intra-city fiber networks in the following markets:
Hartford, Connecticut; Rockford, Illinois; Bloomington/Evansville, Fort Xxxxx,
Indianapolis, South Bend/Elkhart, Indiana; Springfield, Massachusetts; Grand
Rapids and Kalamazoo, Michigan; Albany, Buffalo, Rochester and Syracuse, New
York; Columbus, Ohio; Pittsburgh, Pennsylvania; Providence, Rhode Island; Green
Bay, Madison and Milwaukee, Wisconsin.
For further information about Choice One, visit our web site at
xxx.xxxxxxxxxxxx.xxx or contact us at 0-000-000-0000.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, and the Company intends such forward-looking statements be subject to
the safe harbors created thereby. The words "believe", "believes", "expects",
"estimates", "anticipates", "will", "will be", "could", "may" and "plans" and
the negative or other similar words or expressions identify forward-looking
statements made by or on behalf of Choice One Communications Inc. ("the
Company"). These forward-looking statements are subject to many uncertainties
and factors that may cause the actual results of the Company to be materially
different from any future results expressed or implied by such forward-looking
statements. Examples of such uncertainties and factors include, but are not
limited to, continued compliance with covenants for borrowing under our bank
credit facility, availability of financing, availability of significant
operating cash flows, continued availability of regulatory approvals, the number
of potential customers and average revenue for such customers in a market, the
existence of strategic alliances or relationships, technological, regulatory or
other developments in the Company's business, changes in the competitive climate
in which the Company operates, the emergence of future opportunities, and the
Company's ability to complete a financial restructuring, all of which could
cause actual results and experiences to vary significantly from the Company's
current business plan and to differ materially from anticipated results and
expectations expressed in the forward-looking statements contained herein. These
and other applicable risks are summarized under the caption "Risk Factors" and
elsewhere in the Company's Annual Report on Form 10-K for the year ended
December 31, 2003, Registration No. 000-29279, filed with the Securities and
Exchange Commission on March 30, 2004.
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