Choice One obtains $49 million in new loans

New York, Aug. 14 - Choice One Communications, Inc. said it obtained $48.875 million in new term loan financing from existing lenders and investors.

The additional borrowings are in two parts.

Some of the Rochester, N.Y. telecommunications company's existing lenders and preferred stock holders provided a new $44.5 million secured term loan due March 31, 2009. The loan is at Libor plus 575 basis points with interest payable in kind through the first quarter of 2004 and cash after that. Lenders will also receive five-year "penny" warrants for 20% of the shares outstanding.

In addition, some senior lenders provided a $4.375 million senior secured term loan which will be drawn in five equal installments beginning Dec. 31, 2002. Interest is at Libor plus 400 basis points in cash.

Choice One plans to use proceeds from the financings for general corporate purposes. Closing is subject to customary approvals and conditions, the company added. Closing is expected by Sept. 9, 2002.

On closing, Choice One will also amend its existing senior credit facility to defer principal payments due in the fourth quarter of 2003 and first quarter of 2004 to maturity in 2009, saving $6.25 million of cash through 2004.

In addition, all financial covenants through the second quarter of 2004 will be eliminated from the existing facility except for the $10 million minimum cash requirement and maximum capital expenditures covenants. Beginning in the third quarter of 2004 leverage and coverage ratio covenants will be in effect

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