Telegroup Prices $75 Million Senior Discount Note Financing
Fairfield, Iowa, October 20, 1997 --- Telegroup, Inc. (NASDAQ: TGRP), a leading global alternative provider of long distance telecommunications services, announced today that it had priced an issuance of $75 million gross proceeds Senior Discount Notes due 2004.
The Notes, which bear interest at the rate of 10.50% will mature on November 1, 2004. Cash interest on the Notes will neither accrue nor be payable prior to May 1, 2000. Commencing May 1, 2000, interest will be payable in cash on the Notes semi-annually in arrears on each May 1, and November 1, at a rate of 10.50% per annum. The Notes will be redeemable by Telegroup after November 1, 2001 at a redemption price of 105.25% of the face value, which decreases to par by November 1, 2004. The Notes will rank senior in right of payment to all existing and future subordinated Telegroup indebtedness and pari passu in right of payment with all unsubordinated Telegroup indebtedness. 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 the Notes offering will be used to further the expansion of Telegroup's Intelligent Global Network (TIGN), primarily for the purchase of digital fiber-optic transmission capacity which will be used to connect TIGN switches in core and selective target markets. In addition, proceeds will be used to upgrade Telegroup's current billing and accounting systems, and the remainder for working capital and other corporate purposes, including potential acquisitions.
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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