MPOWER COMPLETES SUCCESSFUL BONDHOLDER SOLICITATION
AND SIGNS VOTING AGREEMENTS WITH MAJORITY OF PREFERRED STOCKHOLDERS.
Moves forward with recapitalization plan.
ROCHESTER, NY — March 22, 2002 — Mpower Holding Corporation (AMEX:MPE), a facilities-based broadband communications provider, announced today that it has successfully completed its bondholder solicitation which resulted in more than 99% of the holders of Mpower's 2010 Senior Notes entering into voting agreements with the company in support of its proposed recapitalization plan announced on February 25, 2002. Each bondholder who participated in the solicitation will receive a consent fee equal to their pro-rata share of approximately $19 million.
In addition, Mpower announced today that more than two-thirds of the holders of its issued and outstanding shares of preferred stock have also entered into voting agreements with the company in support of the proposed recapitalization plan.
"We are extremely pleased that our proposed recapitalization plan has received the up-front support of our 2010 Senior Noteholders and preferred shareholders, and that they and all current stakeholders in Mpower, are expected to continue to be stakeholders in our reorganized company," said Mpower Communications Chief Executive Officer Rolla P. Huff. "We believe our plan will create a financially stronger company which will benefit our employees, customers, equity holders and creditors."
With the necessary backing of these key constituencies, Mpower plans to move forward with its recapitalization plan, which would retire $583.4 million in debt and preferred stock in exchange for $19 million in cash and new equity in the reorganized company. Mpower and its subsidiaries, Mpower Communications Corp. and Mpower Lease Corporation, intend to implement the proposed recapitalization plan by commencing a voluntary, pre-negotiated Chapter 11 proceeding no later than April 30, 2002. Mpower is operating at full capacity, providing its complete range of services to customers throughout this process, and is continuing its ongoing efforts to secure additional funding needed to complete its plan.
Subject to the court's approval, Mpower's proposed recapitalization plan would provide that its 2010 Senior Noteholders receive 85% of the common stock of the recapitalized company issued and outstanding on the effective date of the plan, and be entitled to nominate four new members to the reorganized company's seven member Board of Directors. The company's preferred and common stockholders would receive 13.5% and 1.5% respectively of the common stock of the recapitalized company on the effective date of the plan, and the preferred stockholders would be entitled to nominate one new director to the reorganized company's Board of Directors.
"With a pre-negotiated path to significantly reduce our long term debt and preferred stock, we believe that we are now in a stronger position to secure the funding we need to carry out our recapitalization plan," added Huff. "We are continuing to meet with prospective equity and debt investors toward that end."
Also today Mpower announced that next week it will voluntarily move from the NASDAQ National Market to the NASD Over the Counter Bulletin Board. Mpower's common and preferred stock will continue to trade under the symbols MPWR and MPWRP respectively. After the company files Chapter 11, its stock will continue to trade on the Over the Counter Board, but its symbols will change.
About Mpower
Mpower Holding Corporation (AMEX:MPE) is the parent company of Mpower Communications Corp., a facilities-based broadband communications provider offering a full range of data, telephony, Internet access and Web hosting services for small and medium-size business customers. Further information about the company can be found at www.mpowercom.com.
Forward-Looking Statements
Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Mpower Holding Corporation cautions investors that certain statements contained in this press release that state management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. Management wishes to caution the reader these forward-looking statements are not historical facts and are only estimates or predictions. Actual results may differ materially from those projected as a result of risks and uncertainties including, but not limited to, receipt of the requisite support pursuant to federal bankruptcy laws for the proposed recapitalization plan from those entitled to vote on the proposed recapitalization plan, meeting the requirements of the federal bankruptcy code for confirmation of the proposed recapitalization plan, judicial approval of the proposed recapitalization plan in accordance with all relevant bankruptcy laws, projections of future sales, market acceptance of our product offerings, our ability to secure adequate financing or equity capital to fund our operations, network expansion and proposed recapitalization plan, our ability to reduce our outstanding indebtedness, our ability to manage rapid growth and maintain a high level of customer service, the performance of our network and equipment, the cooperation of incumbent local exchange carriers in provisioning lines and interconnecting our equipment, regulatory approval processes, changes in technology, price competition and other market conditions and risks detailed from time to time in Mpower's Securities and Exchange Commission filings.
