TELEGROUP, INC. ANNOUNCES EXTENSION OF INTERIM FINANCING
Fairfield, IA ( Dec. 14, 1998-)
-- Telegroup, Inc. (Nasdaq: TGRP
- news) today announced that the Company has successfully extended the maturity of a
$25 million credit facility to February 1, 1999. The Company has also arranged deferred
payment plans with vendors, thereby reducing the requirement for an immediate cash
infusion. The existing facility continues to be secured by the assets of the Company.
Clifford Rees, Telegroup's Chief Executive Officer, commented, ``This credit extension
gives us the ability to continue to identify an optimal solution to our financing needs.
We are pursuing numerous
opportunities to improve further the financial health of the company, including potential
strategic combinations.''
The Company has implemented many key elements of its restructuring plan, including a
reduction in workforce to date of more than 20% worldwide. This reduction has resulted, in
part, from improved
operating efficiencies due to the introduction of back office systems, decentralization of
operations, streamlining of procedures and focusing on core retail-oriented business
activities.
On December 7, 1998, PCS Telecom, Inc., Telegroup's Florida-based affiliate in which it
holds a 60% interest, ceased operations. PCS provided turnkey PC-based voice processing
switches. The closure of PCS will result in a de minimus reduction in revenues and
significant savings on Telegroup's anticipated cash expenditures.
The Company also announced that PeopleSoft™, a well-respected financial accounting
system, was successfully implemented and used for the first time to prepare financials on
a consolidated basis for the
month of October. Revenues for that month exceeded $34 million, with retail revenues
comprising more than $24.1 million of that total.
Clifford Rees continued, ``I am very pleased that the retail segment of our business
continues to generate significant revenues. This reflects the combined efforts of the
company's direct sales force and independent agents throughout the world. In view of
Telegroup's restructuring activities, the revenue levels achieved in October confirm the
strength of our core business and will provide a platform upon which Telegroup can
prosper.''
Telegroup provides national and international long distance telecommunications services,
serving residential and small and medium-sized business customers in more than 200
countries worldwide. The company also provides value-added wholesale services to over 40
domestic and international telecommunications carriers. Telegroup operates a global,
digital, facilities-based network, the Telegroup Intelligent Global Network®, which
consists of 25 Nortel GSP and Excel LNX voice switches in 12 countries, 23 Nortel Passport
ATM switches, 6 enhanced services platforms, 26,000 miles of owned and leased capacity on
digital fiber-optic cable links, and leased parallel data transmission capacity. Telegroup
had revenues of $337 million in 1997.
This press release contains certain 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, including statements regarding Telegroup's future operating performance and
network expansion. Telegroup's actual results might differ materially from those projected
in forward-looking statements as a result of numerous factors including without
limitation, the Company's success in developing its business plan and acquiring additional
financing needed to meet this plan, market competition, unforeseen operating and technical
problems, regulatory uncertainties, possible delays in the full implementation of
liberalization initiatives by foreign governments, foreign currency fluctuations, and
changes in the U.S. and foreign tax laws. Those and other risks are described in the
Company's filings with the Securities and Exchange Commission.
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