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Gross Proceeds of Approximately $250 Million; First 12 Markets Pre-Funded to Free Cash Flow Breakeven.
DALLAS, TX, February 3, 1998 -- Allegiance Telecom, Inc. announced today that the Company has closed the sale of units consisting of 11 3/4% Senior Discount Notes and warrants. Gross proceeds from the offering totaled approximately $250 million. The notes, due 2008, will not pay cash interest for the first five years. The warrants will be exercisable to purchase approximately 1.5% of the Company’s outstanding capital stock on a fully diluted basis. Morgan Stanley Dean Witter, Salomon Smith Barney, Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette managed the offering of the securities. Allegiance Telecom intends to use the net proceeds from this offering primarily for expenditures related to deploying and operating its networks, including the purchase and installation of switching and transmission equipment. First 12 Markets Pre-Funded to Free Cash Flow Breakeven Allegiance Telecom, Inc. is a competitive local exchange carrier headquartered in Dallas, Texas. The Company offers businesses a full suite of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services. Allegiance is targeting 24 major metropolitan areas in the U.S. with its “one-stop shopping” approach. The net proceeds will allow Allegiance to pre-fund its first 12 markets to free cash flow breakeven. Markets scheduled for initial service in 1998 include Atlanta, Chicago, Dallas, Los Angeles and New York. The remaining seven markets, due to be in service by mid-1999, include Boston, Fort Worth, Long Island, Northern New Jersey, Orange County, San Francisco and Washington, D.C. The notes and warrants offered have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Certain statements in this press release constitute “forward-looking statements.” These statements reflect the Company’s views as of the date they are made, but are subject to many uncertainties which may cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. Examples of such uncertainties and factors include whether and when the Company will obtain necessary regulatory approvals and interconnection agreements.