World Access, Inc. News Release
SUMMARY: WORLD ACCESS, INC. AND TELCO SYSTEMS, INC. TO MERGE
FOR IMMEDIATE RELEASE
ATLANTA, GEORGIA June 4, 1998 WORLD ACCESS, INC. (Nasdaq: WAXS) and
Telco Systems, Inc. (Nasdaq: TELC) announced today that they have entered
into a definitive agreement to merge the two companies. The closing of the
merger is subject to the satisfaction of customary conditions, including
the receipt of stockholder and regulatory approvals. The transaction is
expected to be accounted for as a purchase and to qualify as a tax-free
reorganization. The combined company will retain the World Access name.
Telco Systems, based in Norwood, Massachusetts, has supplied products and
related services to the telecommunications industry since 1972. The
company is well known for its asynchronous fiber optic systems and
intelligent channel banks, with an installed base of over $1 billion.
Today, the company concentrates on the integrated access, high capacity
multiplexer and Frame Relay/ATM access markets. Telco Systems has
established supply contracts with leading telecommunications service
providers, including NYNEX/Bell Atlantic, GTE, British Telecom and Concert
Communications, and has recently introduced several new products, including
its Access45trademark and EdgeLink 100trademark. During its latest fiscal
year, Telco Systems generated approximately $120 million in revenues.
The merger agreement provides that each of the approximately 11 million
shares of Telco Systems common stock will be converted into shares of World
Access common stock having a value of $17.00 per share, based on the
average daily closing price of World Access common stock as reported on the
Nasdaq National Market System for a predefined period prior to the
effective time of the merger (the "Closing Price"). If the Closing Price
is more than $36.00, then each share of Telco Systems common stock will be
converted into 0.4722 shares of World Access common stock. If the Closing
Price is less than $29.00, then each share of Telco Systems common stock
will be converted into 0.5862 shares of World Access common stock.
The merger agreement has been unanimously approved by the Boards of
Directors of both companies. The Robinson-Humphrey Company, LLC is acting
as financial advisor to World Access on this transaction and Broadview
Associates LLC is representing Telco Systems.
The companies will be sponsoring a teleconference to review the planned
merger on Friday, June 5, 1998, at 8:30 a.m., EDT. To participate in this
teleconference, interested parties should call 212-346-6404. A taped
replay will be available on Friday from 12:00 p.m. to 8:00 p.m. and on
Monday from 8:00 a.m. to 5:00 p.m. To listen to the taped replay, call
1-800-633-8284 and enter reservation #4374730 (international callers must
dial 303-248-1201 and then the reservation number).
Steven A. Odom, Chairman and Chief Executive Officer of World Access, said,
"The combination of World Access and Telco Systems will strengthen our
competitive positioning in the global telecommunications market. The
proprietary technology, advanced product offerings and strong customer
relationships contributed by Telco Systems will significantly enhance our
ability to support and service our collective customers as they build new
and/or upgrade existing telecommunications networks. The merger is
expected to be consummated in the third quarter and positively impact World
Access earnings per share for calendar year 1999."
Hensley E. West, President and Chief Operating Officer of World Access,
added, "We are pleased that Telco's team of experienced industry
professionals will continue to manage Telco Systems as a key division of
World Access. Telco Systems will become the cornerstone of our transport
and access product areas, encompassing several other existing World Access
divisions. The integration of these divisions will provide a technology
and product focus geared towards meeting the increasing demands for value-
added network access systems. As a result of the merger, we will provide
our customers greater network solutions capabilities, in addition to the
network access services that will be available as a result of the pending
Resurgens acquisition."
Dr. William B. Smith, President and Chief Executive Officer of Telco
Systems, said, "The strong management team we've assembled at Telco Systems
over the past few years is excited to join forces with World Access. We
have concentrated on developing competitive high-speed multiplexer and
integrated access systems employed at the edge of the network and have
recently released several new products that are receiving excellent market
acceptance. We look forward to combining talents with World Access to
offer our broad customer base a more complete network solution."
While much of Telco Systems' revenue is generated through the sale of
equipment directly to approximately two dozen large service providers
around the world, the company brings to World Access a solid set of
distribution partners, including Walker and Associates, Sprint North
Supply, GTE Supply, Alltel Supply and TelSource. In addition, Telco
Systems has relationships with over 40 distributors in international
markets. The combined portfolio of World Access and Telco Systems will
give all of the combined company's sales channels a more complete line of
product solutions.
Each company brings to this alliance distinct competencies that will offer
immediately operational efficiencies, especially in the areas of
manufacturing and customer service. For example, World Access'
manufacturing infrastructure includes "rack 'n stack" configuration
capabilities that will be available for Telco Systems' products and
customers. With this capability, many different product configurations can
be pre-assembled and tested for immediate shipment, offering a competitive
advantage in the sales process. Both companies are ISO certified, and have
well established and documented operating procedures to assure high quality
products and services are provided to their customers.
World Access, Inc. develops, manufactures and markets wireline and wireless
switching, transport and access products for the global telecommunications
markets. The Company's products allow telecommunications service providers
to build and upgrade their central office and outside plant networks in
order to provide a wide array of voice, data and video services to their
business and residential customers. World Access offers digital switches,
billing and network telemanagement systems, cellular base stations, fixed
wireless local loop systems, intelligent multiplexers, microwave and
millimeterwave radio systems and other telecommunications network products.
To support and complement its product sales, the Company also provides its
customers with a broad range of design, engineering, manufacturing,
testing, installation, repair and other value-added services.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. ACTUAL RESULTS, INCLUDING THE LEVEL OF EARNINGS OF BOTH
WORLD ACCESS AND TELCO SYSTEMS, AND THE SUCCESS OF THE PROPOSED MERGER MAY
DIFFER FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO,
RISKS ASSOCIATED WITH ACQUISITIONS, SUCH AS DIFFICULTIES IN THE
ASSIMILATION OF OPERATIONS, TECHNOLOGIES AND PRODUCTS OF THE ACQUIRED
COMPANIES, RISKS OF ENTERING NEW MARKETS, COMPETITIVE RESPONSE, AND A
DOWNTURN IN THE TELECOMMUNICATIONS INDUSTRY. FOR A MORE DETAILED
DESCRIPTION OF THE RISK FACTORS ASSOCIATED WITH WORLD ACCESS AND TELCO
SYSTEMS, PLEASE REFER TO THE SEC FILINGS OF THE RESPECTIVE COMPANIES.
CONTACT: World Access, Inc. Steven A. Odom, Hensley E. West or
(404-231-2025) Mark A. Gergel
Telco Systems, Inc. William B. Smith, William J. Stuart or
(781-551-0300) Betty Rock