Telegroup Completes $25 Million Financing
Fairfield, Iowa, October 1, 1997 --- Telegroup Inc. (NASDAQ: TGRP), a leading alternative provider of international telecommunications services, announced today that it has sold $25 million of Convertible Subordinated Notes due 2005.
The Notes, which bear interest at the rate of 8% will mature on April 15, 2005 and are convertible by the holders into common stock of Telegroup at a conversion price of $12 per share. The Notes are redeemable by Telegroup after October 15, 2001 at a redemption price of 103% of the face value, which decreases to par by October 15, 2003. Telegroup granted the holders certain registration rights with respect to the common stock issuable upon conversion of the Notes. The Notes have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States, absent registration or an applicable exemption from registration requirements.
The proceeds from this current offering will be used to further the expansion of Telegroup's Intelligent Global Network (TIGN) in core and selective target markets so as to provide call-through international long distance services to existing and future customers. In addition, proceeds from the placement will be used to pay down an existing $15 million short term credit facility.
Telegroup is a leading global alternative provider of long distance telecommunications services. The Company offers a broad range of discounted international, national, value-added wholesale and enhanced telecommunications services to small- and medium-sized business, residential and wholesale customers in over 180 countries worldwide. Telegroup has achieved its significant international market penetration by developing what it believes to be one of the most comprehensive global sales, marketing and customer service organizations in the international telecommunications industry. Telegroup operates a digital, facilities-based telecommunications network to deliver its services in a reliable, flexible and cost-effective manner to approximately 268,000 active customers worldwide. According to Federal Communications Commission statistics, Telegroup was the thirteenth largest U.S. carrier of long distance traffic in 1996.
Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995: This press release contains statements which are not historical facts and may be considered forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as statements regarding expected future performance of the Company. Telegroup's actual results might differ materially from those projected by those statements due to numerous factors, including the Company's success in developing its business plan and acquiring additional financing needed to meet this plan, foreign currency fluctuations, termination of certain operating agreements, and changes in tax law.
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