Otelco offers Income Deposit Securities in exchange for class B shares

By Jennifer Chiou

New York, March 15 - Otelco Inc. announced it plans an offer to issue up to 544,671 income deposit securities representing 544,671 class A shares and $4,085,032.50 of 13% senior subordinated notes due 2019 in exchange for up to 544,671 shares of its class B common stock.

The company said that it is offering to exchange the income deposit securities in order to satisfy its obligations contained in the investor rights agreement for the class B shares.

Otelco noted that it will not receive any proceeds from the exchange offer.

Each Income Deposit Security initially represents one share of class A stock and a $7.50 principal amount 13% senior subordinated note.

The last reported price for the company's IDSs on March 12 was $16.09 each.

Otelco added that its class B stock is not publicly traded.

According to an S-4 filing with the Securities and Exchange Commission, holders of IDSs may separate the IDSs into the class A shares and the senior subordinated notes. The shares and notes may also be combined to form IDSs.

Otelco said that it will be permitted to defer interest payments on the notes subject to certain limitations.

Questions may be directed to the company at 205 625-3574 or curtis@otelcotel.com.

Otelco is an Oneonta, Ala.-based wireline telecommunications services provider.

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