Internet Services Provider US LEC Completes $150 Million Private Placement

October 1, 2004 - (HostReview.com) - US LEC Corp. (www.uslec.com), a super-regional telecommunications carrier providing integrated voice, data and Internet services to businesses and enterprise organizations throughout the Eastern United States, announced today that it has successfully concluded its private placement of $150 million of Second Priority Senior Secured Floating Rate Notes due 2009. As announced earlier, US LEC used the net proceeds from the offering to retire its existing senior credit facility and senior subordinated notes, with the additional proceeds to be used for working capital purposes.

"By demonstrating our ability to access the capital markets again with solid operational results, US LEC completed one of only a few successful telecom financings this year," said Aaron Cowell, president and CEO of US LEC. "We were able to do this in an investor climate that is highly selective, sensitive to timing and extremely demanding of our industry. Clearly, there are investors that recognize the significance of our strong operational performance and our ability to consistently acquire and retain customers at industry-leading levels. Thus far in 2004, US LEC surpassed the 20,000th customer mark, grew end-customer revenue to over 77% of total revenue, and maintained a customer retention rate that is among the highest in our sector. With this refinancing complete, US LEC is ideally positioned to capitalize on these successes. We now have more operating flexibility, allowing us to judiciously invest in our growth, deepen our market penetration and add to our product suite, all of which makes US LEC an even stronger company and a better communications partner for our customers."
Michael Robinson, executive vice president and CFO of US LEC commented, "Our investors recognize the value of our capital efficient model with a focus on recurring revenue, combined with cost controls and efficiencies. We raised this $150 million on favorable terms with no principal payment due until 2009, enabling us to pay off our existing bank debt, subordinated debt and deferred interest. Going forward, US LEC will have a structure that we believe balances economics with operating flexibility, and will no longer be burdened by various operating restrictions that previously limited our ability to address the strategic evolution of our business. With an even stronger balance sheet and a liquidity position that increased by approximately $15 million, we will now be able to invest in our business with funds that we would have repaid during 2005 and 2006 to optimize the growth of US LEC."
"US LEC is different - we keep our commitments to our stakeholders. Our customers, employees, suppliers and investors all have confidence that US LEC will deliver," concluded Cowell. "We have fully repaid our original lenders while avoiding the pitfalls that have affected many in our sector. US LEC has never abandoned its shareholders, stranded a customer, left a market or had a layoff—a strong statement that few in telecom today can make. An unwavering commitment to our customers, along with consistent performance and strong growth, continues to be the cornerstone of success for US LEC."

About US LEC
Based in Charlotte, NC, US LEC is a leading telecommunications carrier providing integrated voice, data and Internet services to medium and large businesses and enterprise organizations throughout 15 Eastern states and the District of Columbia. US LEC services include local and long distance calling services, Voice over Internet Protocol (VoIP) service, advanced data services such as Frame Relay, Multi-Link Frame Relay and ATM, dedicated and dial-up Internet services, managed data solutions, data center services and Web hosting. US LEC also provides selected voice services in 27 additional states and selected data services nationwide. For more information about US LEC, visit www.uslec.com.