Exhibit 99.2
McLeodUSA Announces Overwhelming Acceptance of Reorganization Plan
CEDAR RAPIDS, Iowa--(BUSINESS WIRE)--March 28, 2002--McLeodUSA Incorporated,
one of the nation's largest independent competitive local exchange carriers,
announced today that its pre-negotiated Plan of Reorganization has been
accepted by all classes entitled to vote on the Plan.
According to the unaudited tally of votes received by the March 27, 2002
voting deadline, the Plan was accepted by more than 98% of the senior notes
that voted, in terms of both principal amount voted and number of holders
voting. The Plan was also accepted by more than 98% of the shares of the
Company's preferred stock that voted on the Plan. The final voting report
will be filed next week with the United States Bankruptcy Court for the
District of Delaware.
The Plan remains subject to confirmation by the Bankruptcy Court. A hearing
on confirmation of the Plan is scheduled for April 5, 2002.
As previously announced, under the terms of the Plan:
o Holders of the Company's senior notes will receive their pro rata share
of a cash payment in an amount up to $670 million. This cash payment
will be funded by (i) $570 million of the $600 million of aggregate
proceeds to be received from the Company's previously announced
agreement for the sale of its directory publishing business to Yell
Group (subject to a price reduction of $200,000 per day if the
transaction closes after April 30, 2002, but prior to August 1, 2002);
and (ii) $100 million in cash from a new equity investment of $175
million by Forstmann Little. Bondholders will also receive their pro
rata share of (i) $175 million of new convertible preferred stock which
is convertible into common stock representing 15% of the reorganized
McLeodUSA common stock and which carries a cumulative dividend of 2.5%
per annum and (ii) 5-year warrants to purchase an additional 6% of
common stock for $30 million.
o The $175 million new equity investment in the Company by Forstmann
Little will be in exchange for (i) approximately 23% of the reorganized
McLeodUSA common stock and (ii) 5-year warrants to purchase an
additional 6% of common stock for $30 million.
o The Company's existing Series D and Series E preferred stock will be
converted into approximately 35% of the reorganized McLeodUSA common
stock. The Company's Series A preferred stock will be converted into
approximately 10% of the reorganized McLeodUSA common stock.
o Holders of the Company's existing Class A common stock are expected to
retain approximately 17% of the shares of the reorganized McLeodUSA
common stock.
o Forstmann Little will be the largest shareholder of McLeodUSA after the
recapitalization with an approximate 58% stake in the Company.
It is expected that the Plan, if confirmed, would be implemented in April 2002.
About McLeodUSA:
McLeodUSA provides integrated communications services, including local
services, in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The
Company is a facilities-based telecommunications provider with, as of
December 31, 2001, 42 ATM switches, 60 voice switches, 485 collocations, 525
DSLAMs, over 31,000 route miles of fiber optic network and more than 8,600
employees. Visit the Company's web site at www.mcleodusa.com.
Some of the statements in this press release include statements about our
future expectations. Statements that are not historical facts are
"forward-looking statements" for the purpose of the safe harbor provided by
Section 21E of the Exchange Act and Section 27A of the Securities Act. Such
statements include projections of financial and operational results and
goals, including revenue, EBITDA, profitability, savings and cash. These
forward-looking statements are subject to known as well as unknown risks and
uncertainties that may cause actual results to differ materially from our
expectations. Our expectations are based on various factors and assumptions
and reflect only our predictions and actual results may vary. In some cases,
you can identify these so-called "forward-looking statements" by our use of
words such as "may," "will," "should," "expect," "plan," "anticipate,"
"believe," "estimate," "predict," "project," "intend," "continue" or
"potential" or the negative of those words and other comparable words. You
should be aware that those statements only reflect our predictions. Actual
events or results may differ substantially. Important factors that could
cause actual events or results of McLeodUSA to be materially different from
the forward-looking statements include the ability of the Company to continue
as a going concern; court approval of the Company's first day papers and
other motions prosecuted by it from time to time; the ability of the Company
to develop, prosecute, confirm and consummate one or more plans of
reorganization with respect to the chapter 11 case (or any significant delay
with respect thereto); risks associated with third parties seeking and
obtaining court approval to terminate or shorten the exclusivity period for
the Company to propose and confirm one or more plans of reorganization, for
the appointment of a chapter 11 trustee or to convert the case to a chapter 7
case; the ability of the Company to obtain trade credit, and shipments and
terms with vendors and service providers for current orders; the Company's
ability to maintain contracts that are critical to its operations; potential
adverse developments with respect to the Company's liquidity or results of
operations; the ability to fund and execute its business plan; the ability to
attract, retain and compensate key executives and associates; and the ability
of the Company to attract and retain customers; regulatory approvals; the
number of potential customers in a target market; the existence of strategic
alliances or relationships; technological, regulatory or other developments
in the industry; changes in the competitive climate in which McLeodUSA
operates; and the emergence of future opportunities. These and other
applicable risks are summarized under the caption "Risk Factors" in the
McLeodUSA Annual Report on Form 10-K for the fiscal year ended December 31,
2000, which is filed with the Securities and Exchange Commission.
Contact:
McLeodUSA Incorporated, Cedar Rapids
Investor Contact:
Bryce E. Nemitz, 319/790-7800
or
Press Contact:
Bruce A. Tiemann, 319/790-7800
mcleodusa_ir@mcleodusa.com
Exhibit 99.3
McLeodUSA Announces Court Approval of Plan of Reorganization
CEDAR RAPIDS, Iowa--(BUSINESS WIRE)--April 5, 2002--McLeodUSA Incorporated,
one of the nation's largest independent competitive local exchange carriers,
announced today that the United States Bankruptcy Court for the District of
Delaware entered an order confirming its pre-negotiated Plan of
Reorganization ("the Plan"), which was filed on January 31, 2002. The
Bankruptcy Court approval follows last week's overwhelming acceptance of the
Plan by over 98% of the senior notes and shares of the Company's preferred
stock that voted on the Plan.
McLeodUSA expects the Plan to become effective on April 16, 2002. As outlined
in the Company's Form 8-K dated March 5, 2002, this comprehensive
recapitalization will eliminate $3 billion of high yield debt and
approximately $325 million of associated interest expense. Key elements of
the Plan include the following:
o the sale of the Company's Directory Publishing Business;
o a new cash investment by Forstmann Little & Co. for new common stock
and warrants;
o payment of cash and issuance of new Series A preferred stock and
warrants to the existing bondholders;
o conversion of the existing preferred stock into new common stock;
o the conversion of existing common stock into new common stock;
o repayment of term loans and a reduction in commitments under its senior
secured credit agreement.
The Company's new common stock will be listed on the Nasdaq National Market
and is expected to be open for trading shortly after the effectiveness of the
Plan. McLeodUSA has applied for inclusion of the new Series A preferred
stock, to be distributed to the existing bondholders, on the Nasdaq National
Market. Prior to the effective date of the Plan, the Company will provide
additional information about the timing of distributions under the Plan and
the procedures for effecting such distributions.
Under the terms of the Plan, the Company will not be able to make the full
distribution of the new common stock to its existing common stockholders upon
the effective date due to unresolved purported class action securities claims
against McLeodUSA. McLeodUSA believes that the securities claims are without
merit and intends to object to the allowance of such claims. Under the
bankruptcy laws, any recovery for such shareholder claims must be satisfied
from the shares of new common stock available for distribution to existing
common stockholders. Until such issues are resolved, the Court requires that
a portion of common stock be reserved. The Company will petition the Court to
establish a minimum reserve of new common stock for such claims in order to
allow for the prompt distribution of the remaining shares of new common stock
to existing holders of common stock pursuant to the terms of the Plan. A
hearing date of April 29, 2002 has been set to deal with the reserve, if
necessary.
About McLeodUSA:
McLeodUSA provides integrated communications services, including local
services, in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The
Company is a facilities-based telecommunications provider with, as of
December 31, 2001, 42 ATM switches, 60 voice switches, 485 collocations, 525
DSLAMs, over 31,000 route miles of fiber optic network and more than 8,600
employees. Visit the Company's web site at www.mcleodusa.com.
Some of the statements in this press release include statements about our
future expectations. Statements that are not historical facts are
"forward-looking statements" for the purpose of the safe harbor provided by
Section 21E of the Exchange Act and Section 27A of the Securities Act. Such
statements include projections of financial and operational results and
goals, including revenue, EBITDA, profitability, savings and cash. These
forward-looking statements are subject to known as well as unknown risks and
uncertainties that may cause actual results to differ materially from our
expectations. Our expectations are based on various factors and assumptions
and reflect only our predictions and actual results may vary. In some cases,
you can identify these so-called "forward-looking statements" by our use of
words such as "may," "will," "should," "expect," "plan," "anticipate,"
"believe," "estimate," "predict," "project," "intend," "continue" or
"potential" or the negative of those words and other comparable words. You
should be aware that those statements only reflect our predictions. Actual
events or results may differ substantially. Important factors that could
cause actual events or results of McLeodUSA to be materially different from
the forward-looking statements include: court approval of motions prosecuted
by the Company from time to time in the chapter 11 case; the ability of the
Company to consummate its plan of reorganization with respect to the chapter
11 case (or any significant delay with respect thereto); the ability of the
Company to obtain trade credit, and shipments and terms with vendors and
service providers for current orders; the Company's ability to maintain
contracts that are critical to its operations; potential adverse developments
with respect to the Company's liquidity or results of operations; the ability
to fund and execute its business plan; the ability to attract, retain and
compensate key executives and associates; and the ability of the Company to
attract and retain customers; regulatory approvals; the number of potential
customers in a target market; the existence of strategic alliances or
relationships; technological, regulatory or other developments in the
industry; changes in the competitive climate in which McLeodUSA operates; and
the emergence of future opportunities. These and other applicable risks are
summarized under the caption "Risk Factors" in the McLeodUSA Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, which is filed with
the Securities and Exchange Commission.
Contact:
McLeodUSA Incorporated, Cedar Rapids
Investor Contact:
Bryce E. Nemitz, 319/790-7800
or
Press Contact:
Bruce A. Tiemann, 319/790-7800
mcleodusa_ir@mcleodusa.com
Exhibit 99.4
McLeodUSA Announces Completion of Financial Restructuring,
Emergence From Chapter 11
CEDAR RAPIDS, Iowa - April 17, 2002 - McLeodUSA Incorporated:
o New McLeodUSA common stock and preferred stock scheduled to commence
trading on NASDAQ on Thursday, April 18, 2002
o McLeodUSA files motion to establish a reserve for securities claims in
order to allow distribution of new common stock to existing common
stockholders
McLeodUSA Incorporated, one of the nation's largest independent competitive
local exchange carriers, announced that its Amended Plan of Reorganization of
McLeodUSA Incorporated (the "Plan") has become effective and that it has
emerged from Chapter 11 protection. The Plan went into effect only 75 days
after its filing. As previously announced, the Plan received overwhelming
approval from all voting classes of McLeodUSA security holders and was
confirmed by the United States Bankruptcy Court for the District of Delaware
on April 5.
Pursuant to the Plan, McLeodUSA today will distribute $670 million in cash to
its senior noteholders, as well as a new Series A preferred stock and
warrants to purchase new common stock. McLeodUSA today will also distribute
new common stock to its old preferred stockholders. McLeodUSA new common
stock will resume trading on Nasdaq on April 18 under the symbol "MCLDD."
McLeodUSA new Series A preferred stock will also begin trading on Nasdaq on
April 18 under the symbol "MCLDO." The distribution of new common stock to
existing holders of common stock cannot be made until the Company is able to
establish an appropriate reserve, if any, related to unresolved claims made
on behalf of purported securities class action claimants.
In conjunction with its emergence from Chapter 11 protection, McLeodUSA:
o sold its Directory Publishing Business to Yell Group Ltd. for $600
million;
o received $175 million from Forstmann Little & Co. in connection with
the sale of new common stock and warrants to purchase common stock;
o entered into a $110 million revolving credit facility (which may be
increased to $160 million), expiring on May 31, 2007, with a banking
syndicate led by arranger J.P. Morgan Chase and co-arrangers, Bank of
America and Citibank; and
o announced that Jeffrey D. Benjamin has joined the Board of Directors of
McLeodUSA as the representative of the Company's former noteholders.
The Plan is described in detail in the Disclosure Statement with Respect to
Amended Plan of Reorganization of McLeodUSA Incorporated (the "Disclosure
Statement") filed as Exhibit 99.1 to Current Report on Form 8-K filed with
the Securities and Exchange Commission on March 5, 2002 and, also, in the
Annual Report on Form 10-K filed with the SEC on April 12, 2002.
The Plan provides for different types of distributions to be made to three
basic classes of claimants and interest holders.
Class 5, the largest class in the Plan, was made up of claims of
approximately $3 billion of McLeodUSA senior noteholders. Over 98% of the
senior notes that voted on the Plan approved it. Holders of Class 5 claims
will receive a combination of cash, McLeodUSA preferred stock and warrants to
purchase McLeodUSA Class A common stock in respect of their claims as set
forth below for each $1,000 of claims:
Approximate Approximate Warrants to
Cash Preferred Shares purchase Common Stock
---------------------------------------------------------------
Class 5
10 1/2% Discount Notes............... $218.30 3.26 7.22
12% Notes............................ 234.58 3.50 7.76
11 1/2% Notes........................ 226.46 3.38 7.49
9 1/4% Notes......................... 231.26 3.45 7.65
8 3/8% Notes......................... 227.09 3.39 7.51
9 1/2% Notes......................... 225.36 3.36 7.45
11 3/8% Notes........................ 234.86 3.51 7.77
8 1/8% Notes......................... 228.38 3.41 7.55
Total Class 5 $670,000,000 10,000,000 22,159,091
Class 6 was made up of claims of holders of McLeodUSA preferred stock
outstanding prior to emergence. Over 99% of the preferred stock that voted on
the Plan approved it. Holders of Class 6 claims will receive McLeodUSA common
stock in respect of their claims as set forth below:
Approximate
Common Stock per
share of Old Total Shares of New
Preferred Stock Common Stock
----------------------------------------
Class 6
Series A Preferred Stock......... 29.32 33,696,559
Series D Preferred Stock......... 284.38 78,203,135
Series E Preferred Stock......... 284.38 35,546,879
Class 7 and Class 8 are made up of holders of McLeodUSA common stock
outstanding prior to emergence from Chapter 11 protection and securities
claims, including certain claimants under purported securities class action
lawsuits filed against McLeodUSA. Under the Plan, members of Class 7 and
Class 8 are to share in the distribution of 54,775,663 shares of new common
stock. However, as previously announced and as described more fully below,
under the Plan, McLeodUSA is not allowed to make any distribution to the
members of Class 7 and Class 8 until the purported securities claims are
resolved or the Court establishes a reserve for a portion of the available
shares and permits the distribution of the remainder. The purpose of such a
reserve is to retain new common stock in an amount equal to 100% of the
distribution to which disputed claims would be entitled if their claim was
allowed in full.
As of today, no resolution, full or partial, had been reached in respect of
the purported securities claims, which the claimants allege exceed $300
million. On April 12, 2002, McLeodUSA filed a motion to establish a reserve
for the Class 8 claims. That motion will be heard by the Court on April 29,
2002. Because McLeodUSA believes the securities class action claims are
without merit, the motion seeks to set the reserve at zero. In the
alternative, the motion seeks to have the Court establish a minimal reserve
of between 1.5 million to 4.6 million shares of the approximately 54.8
million shares of new common stock to be distributed to Classes 7 and 8.
For the foregoing reasons, McLeodUSA will not in its initial distribution
make any distribution of shares of new common stock reserved for issuance to
Class 7 and Class 8 until the issues regarding the reserve are resolved.
As previously announced, as a result of its emergence from Chapter 11
protection, McLeodUSA will require implementing fresh start accounting rules.
These rules require McLeodUSA to revalue its assets and liabilities to
current fair value, re-establish stockholders' equity as the reorganization
value determined in connection with the Plan, and record any differences
between the reorganization value and asset values as changes to goodwill. The
adoption of fresh start reporting, in conjunction with the sale of the
Company's Directory Publishing Business, will have a material effect on
McLeodUSA financial statements. As a result, the Company's financial
statements published for periods following April 16, 2002 will not be
comparable with those prepared before April 16, 2002.
About McLeodUSA:
McLeodUSA provides integrated communications services, including local
services, in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The
Company is a facilities-based telecommunications provider with, as of
December 31, 2001, 42 ATM switches, 60 voice switches, 485 collocations, 525
DSLAMs, and over 31,000 route miles of fiber optic network. Visit the
Company's web site at www.mcleodusa.com.
Some of the statements in this press release include statements about our
future expectations. Statements that are not historical facts are
"forward-looking statements" for the purpose of the safe harbor provided by
Section 21E of the Exchange Act and Section 27A of the Securities Act. Such
statements include projections of financial and operational results and
goals, including revenue, EBITDA, profitability, savings and cash. These
forward-looking statements are subject to known as well as unknown risks and
uncertainties that may cause actual results to differ materially from our
expectations. Our expectations are based on various factors and assumptions
and reflect only our predictions and actual results may vary. In some cases,
you can identify these so-called "forward-looking statements" by our use of
words such as "may," "will," "should," "expect," "plan," "anticipate,"
"believe," "estimate," "predict," "project," "intend," "continue" or
"potential" or the negative of those words and other comparable words. You
should be aware that those statements only reflect our predictions. Actual
events or results may differ substantially. Important factors that could
cause actual events or results of McLeodUSA to be materially different from
the forward-looking statements include the ability of the Company to attract,
retain and compensate key executives and associates; the ability of the
Company to attract and retain customers; regulatory approvals; the number of
potential customers in a target market; the existence of strategic alliances
or relationships; technological, regulatory or other developments in the
industry; changes in the competitive climate in which McLeodUSA operates; and
the emergence of future opportunities. These and other applicable risks are
summarized under the caption "Risk Factors" in the McLeodUSA Annual Report on
Form 10-K for the fiscal year ended December 31, 2001, which is filed with
the Securities and Exchange Commission.
- ------------------------------------------
Contact:
McLeodUSA Incorporated, Cedar Rapids
Investor Contact:
Bryce E. Nemitz, 319/790-7800
or
Press Contact:
Bruce A. Tiemann, 319/790-7800
mcleodusa_ir@mcleodusa.com