BOSTON BRUSSELS Latham & Watkins NEW YORK NORTH ERN VIRGINIA CHICAGO ATORNEYS AT LAW ORANGE COUNTY FRANKFURT WWW. LW. COM PARIS HAMBURG SAN DIEGO HONG KONG LONDON LOS ANGELES MILAN MOSCOW NEW JERSEY SAN FRANCISCO SILICON VALLEY SINGAPORE TOKYO WASHINGTON, D.C. July 29, 2002 VIA FACSIMILE AND FEDERAL EXPRESS Kentuky Publi Servie Commission Attention: Tariff Branh P.O. Box 615 211 Sower Boulevard Frankfort, Kentuky 40602-0615 RECEIVED JUL 3 12002 Re: Birh Teleom of the South, Notifiation of Corporate Reorganization at the Parent Company Level Dear Madame or Sir: Birh Teleom of the South, In. ( Birh South ), through ounsel, hereby informs the Kentuky Publi Servie Commission ( Commission ) that its parent ompany, Birh Teleom, In. ( Birh ), today ommened a hapter 11 ase under the federal Bankrupty Code in the U.S. Bankrupty Court for the Distrit of Delaware, as part of a major restruturing of its finanial obligations and apital struture ( Reorganization Plan ). The Reorganization Plan ultimately is intended to transfer ontrol of Birh and indiret ontrol of Birh South from BTI Ventures, LLC (a wholly owned subsidiary of the investment firm Kohlberg, Kravis, Roberts & Co. ( KKR )), to a diffuse group of shareholders led by a number of large investment firms. A press release desribing the proposed reorganization is attahed at Exhibit A. As Birh South does not urrently provide teleommuniations servies in Kentuky, the Reorganization Plan will have no impat on ustomers in the state. Birh South plans no hange to the ompany s name. The major outome of the Reorganization Plan will be a signifiant improvement to the finanial position of Birh South s parent ompany. A orporate organization hart, whih will remain unhanged pre- and post-restruturing, is attahed at Exhibit B. A hart depiting the ownership of Birh South s parent ompany preand post-restruturing is attahed at Exhibit C. Beause we have added the Kentuky Publi Servie Commission to the list of parties authorized to reeive notie of the bankrupty filing, you an expet a opy of formal 1 Birh and all of its subsidiaries filed for bankrupty protetion simultaneously. 555 ELEVENTH STREET, N.W., SUITE 1000 WASHINGTON, D.C. 20004-1304 TELEPHONE: (202) 637-2200 FAX: (202) 637-2201
notie of the filing of the hapter 11 ases under separate over, as well as additional information diretly from the federal bankrupty ourt. (We understand that this distribution may take several weeks.) Please ontat us if you desire additional information or require any formal filings. In addition, if you would like to designate someone in partiular from your ageny to be a diret ontat for this issue please let us know using the ontat information below. Thank you for your time and attention to this matter. Birh South appreiates your ongoing support of its ontinuing effort to bring affordable ompetitive teleommuniations servies into homes and businesses aross the nation, and looks forward to a speedy resolution of this issue. Please stamp and return to me the additional opy provided for that purpose. En 1 osure s Very truly yours, p/yagfll Rihard R. Cameron Jeffrey A. Marks Wesley C. Holmes* Of LATHAM AND WATKINS 555 Eleventh Street, N.W., Suite 1000 Washington, DC 20004-1304 Tel: (202) 637-2200 Fax: (202) 637-2201 * Admitted to pratie in Virginia and Massahusetts. Admission to the Distrit of Columbia Bar pending. 2
EXHIBIT A PRESS RELEASE
NEWS RELEASE teleom Contats: Trent Freeman Birh Teleom (816) 300-3602 Evan Blakwell Birh Teleom (8 1 6) 300-57 1 6 Birh Announes Agreement on Debt Restruturing Company and lenders agree on terms of debt restruturing; pre-negotiated plan provides for no disruption to ongoing operations KANSAS CITY, Missouri, Monday, July 29,2002 - Birh Teleom announed today that it has filed a voluntary plan of reorganization under Chapter 11 of the U.S. Bankrupty Code. This is the onluding step in Birh s plan to redue its institutional debt from $310M to $100M by exhanging it for equity in the ompany. I want to assure existing and prospetive ustomers that this is purely a finanial transation, stated Dave Sott, President and CEO. Customers, suppliers and employees will be unaffeted by adoption of this plan. Birh has been working sine early this year to reah agreement with its lenders on the speifis of the plan. Aording to Sott, banks and bondholders representing 95% of Birh s debt have endorsed the reorganization plan submitted with the Chapter 11 filing. We are gratified by their vote of onfidene in Birh s long-term suess, said Sott. While ontinuing to grow at an industry-leading pae, Birh has also been foused over the last year on improving its operational effiieny and reduing its ost struture. As a result of this effort, the Company has been able to generate a positive operating ash flow while serving more than 100,000 ustomers and adding 5,000 more eah month. With its strong improvement in operating ash flow, ombined with a redution in interest obligations via the debt exhange and the ompany s emphasis on the low-apital UNE-P servie delivery platform, Birh expets to beome finanially self-suffiient upon ompletion of its reorganization plan. Sott expets a relatively quik emergene from Chapter 11 status. Given our solid ash flow performane, the support of our stakeholders for the restruturing plan, and the fat that no additional funding or debtor finaning is needed for its ompletion, we are onfident that the plan an be swiftly proessed and approved by the Court. In the meanwhile, Birh will ontinue to provide loal, long distane and data servies to business and residential ustomers aross ten states without interruption. Birh will also ontinue to be aggressive in aquiring new ustomers, relying on its strong value proposition of reliable servie, easy onversion, better pries, and a better way of doing business. In fat, said Sott, we reently launhed a major marketing ampaign featuring our irreverent but affable spokesdog, Buddy, in a series of billboards, print advertising, and loal Humane Soiety events. About Birh Serving small to mid-size businesses and residential ustomers, Birh Teleom offers a range of servies on one bill - inluding loal and long-distane - aross more than 40 major metro markets in 10 states.
EXHIBIT B CORPORATE ORGANIZATION CHART (TO REMAIN UNCHANGED PRE- AND POST-RESTRUCTURING)
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EXHIBIT C ILLUSTRATIVE CHART PRE- AND POST-RESTRUCTURING
L z E k u V E s.- 6 * V I E.- -0 g $: YI * 0 2 s,. E 6 u 0 E s s 8