1
Exhibit 99.2
DAVEL COMMUNICATIONS, INC. PHONETEL TECHNOLOGIES, INC.
10120 WINDHORST ROAD 1001 LAKESIDE AVENUE
TAMPA, FL 33619 CLEVELAND, OHIO 44114
(OTCBB: DAVL.OB) (OTCBB: PHTE.OB)
AT DAVEL AT PHONETEL AT THE FINANCIAL RELATIONS BOARD
- -------- ----------- --------------------------------
Raymond A. Gross John D. Chichester General Information: Media Contact:
Chairman & CEO President & CEO Alison Ziegler David Closs
(813) 628-8000 (216) 241-2555 (212) 661-8030 (212) 661-8030
FOR IMMEDIATE RELEASE
- ---------------------
DAVEL COMMUNICATIONS, INC. AND PHONETEL TECHNOLOGIES, INC.
----------------------------------------------------------
SIGN LETTER OF INTENT TO MERGE OPERATIONS
-----------------------------------------
- AGREEMENT CALLS FOR THE FINANCIAL RESTRUCTURING OF BOTH COMPANIES
-----------------------------------------------------------------
- SERVICING AGREEMENT TO ACCELERATE SYNERGIES AND COST SAVINGS
------------------------------------------------------------
TAMPA, FLORIDA & CLEVELAND, OHIO -JUNE 13, 2001 -- Davel Communications, Inc.
(OTCBB: DAVL.OB), and PhoneTel Technologies, Inc. (OTCBB: PHTE.OB), the nation's
two leading publicly traded independent pay telephone service providers, today
announced that they have signed a letter of intent to merge. The letter of
intent calls for the execution of a definitive merger agreement by July 31, 2001
and a substantial debt restructuring for each company. In connection with the
expected merger, PhoneTel will become a wholly owned subsidiary of Davel. In
addition, the two companies have entered into a servicing agreement designed to
commence cost savings initiatives in advance of the closing of the merger.
As part of the completion of the merger of the two companies, the senior secured
creditors of both Davel and PhoneTel will exchange a substantial amount of the
combined debt for equity securities of the respective companies and will
restructure the remaining debt. In connection with PhoneTel's debt exchange, its
senior secured lenders will own 87% of PhoneTel's outstanding common stock
immediately prior to the merger with the remaining senior secured debt not to
exceed $36.5 million (as compared to approximately $55 million currently
outstanding). Existing holders of PhoneTel common stock will own 9% of
PhoneTel's outstanding shares, and 4% will be reserved for PhoneTel employee
stock options. In connection with Davel's debt exchange, its senior secured
lenders will own 93% of Davel's outstanding common stock immediately prior to
the merger, with the remaining senior secured debt not to exceed $63.5 million
(as compared to approximately $261 million currently outstanding). Existing
shareholders of Davel common stock will own 3% of Davel's outstanding shares and
4% of the common stock will be reserved for the issuance of stock options to
Davel employees.
Immediately following the merger, current PhoneTel shareholders will own
approximately 3.28% of the shares of Davel common stock and current Davel
shareholders will own approximately 1.91%. Of the remaining shares, 4.00% are
intended to be reserved for issuance of employee stock options and the
companies' current lenders will own approximately 90.81%.
--MORE--
2
Page 2
Effective with the merger, the then outstanding debt of both entities, currently
in the approximate amount of $316 million, will be reduced to $100 million in
debt of the merged entity through the debt and equity restructuring outlined
above. Of this $100 million of restructured debt, $50 million will be amortizing
term debt with interest and principal payable from operating cash flows. Payment
of the interest and principal on the remaining $50 million of debt will be
deferred under terms to be negotiated in connection with the definitive merger
agreement.
The merger will bring together the two largest independent payphone providers in
the country, with a combined installed base of approximately 100,000 payphones.
The combined company is expected to realize significant cost savings through
more efficient concentration of payphone routes, lower field operating costs and
the elimination of redundant general and administrative expenses. Pending the
merger, the administrative offices of PhoneTel and Davel will remain in
Cleveland, Ohio and Tampa, Florida, respectively.
To accelerate these anticipated cost savings prior to the merger becoming
effective, the two companies have entered into a servicing agreement. Under this
agreement, the two companies will immediately focus on gaining operating
efficiencies via mutual servicing arrangements between their respective field
office networks on a geographic basis.
The transaction is subject to the execution of a definitive merger agreement,
approval by the boards of directors of PhoneTel and Davel, approval by the
shareholders and existing senior secured lenders of both companies, and the
receipt of material third party and governmental approvals and consents.
After completion of the merger, John D. Chichester, President and Chief
Executive Officer of PhoneTel, will serve as the Chief Executive Officer of the
merged company and Bruce W. Renard, Davel's Senior Vice President of
Regulatory/External Affairs/Human Resources, General Counsel and Corporate
Secretary, will serve as President.
Ray Gross, Chairman and Chief Executive Officer of Davel commented, "The
combination of our operations with PhoneTel offers an excellent geographic fit,
creating significant synergies and expected cost savings as well as anticipated
enhancements to service quality. With the cooperation of Davel's senior lenders,
this transaction allows us to appropriately restructure Davel to become part of
a more robust entity with a much stronger footing in today's extremely
challenging industry environment."
Commenting on the merger, John D. Chichester, President and CEO of PhoneTel
added, "This transaction represents an exciting and highly beneficial
opportunity for both companies. Together, PhoneTel and Davel will be able to
achieve better route density, and improved operating cost and service
efficiencies -- making this a desirable transaction for both our customers and
stakeholders."
Mr. Chichester concluded, "The merger is the result of a cooperative spirit on
the part of both companies and their lender groups. We believe the new entity
created through this transaction will be well positioned both to meet future
challenges and to take full advantage of new opportunities as they arise in the
payphone industry."
--MORE--
3
Page 3
PhoneTel Technologies, Inc. is a leading independent provider of pay telephones
and related services in the United States. Headquartered in Cleveland, Ohio,
PhoneTel operates approximately 35,000 payphones in 45 states and the District
of Columbia.
Davel Communications, Inc. is the largest independent payphone provider in the
United States. Headquartered in Tampa, Florida, Davel operates approximately
65,000 payphones in 44 states and the District of Columbia.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
Certain of the statements contained herein may be, within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, forward-looking statements (rather than historical facts) that are
subject to risks and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
Davel Communications, Inc. or PhoneTel Technologies, Inc. to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. These uncertainties and other
factors include, without limitation, with respect to either company (i) a
downturn in the public pay telephone industry which is dependent on consumer
spending and subject to the impact of domestic economic conditions, changes in
technology, increased use of wireless communications, and regulations and
policies regarding the telecommunications industry; (ii) the ability to
accomplish its strategic objectives with respect to external expansion through
selective acquisitions or internal expansion; (iii) impairment of liquidity
arising from the possible refusal by its lenders to grant additional advances or
waive potential future defaults under its debt agreement; and (iv) changes in
the dial-around compensation rate and the local coin call rate. Any or all of
these risks and uncertainties could cause actual results to differ materially
from those reflected in the forward looking statements. These forward-looking
statements are based on management's expectations as of the date hereof, and
neither company undertakes any responsibility to update any of these statements
in the future. Information on significant potential risks and uncertainties is
set forth more fully in the Annual Report on Form 10-K for the year ended
December 31, 2000 of each company.
###