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Eschelon Telecom Announces Agreement To Acquire Advanced TelCom

ATI is an affiliate of General Electric Capital Corporation (GECC). ATI provides services primarily in California, Nevada, Oregon and Washington to over 18,000 customers that have approximately 118,000 access lines. With the completion of this transaction, Eschelon will have a leading market position among CLECs operating in the Pacific Northwest. Eschelon will pay $45.5 million in cash to acquire Advanced TelCom. Eschelon has also agreed to repurchase 6.8 million shares of Eschelon Series A Preferred Stock currently owned by an affiliate of GECC. Including synergies, Eschelon expects to add approximately $14 - $18 million of annualized EBITDA in 12-18 months after the transaction closes. The transaction is expected to close by the end of 2004. ",This transaction combines the strengths and market presence of both companies to create a premier regional CLEC operating in the western United States,", stated Richard A. Smith, President and Chief Executive Officer of Eschelon Telecom, Inc. ",We look forward to welcoming the talented team of ATI associates and recognize the contributions they`ve made toward building a solid organization. The combined entity creates a leading regional CLEC that customers can rely on for greater resources, continued solid customer service, more innovative products and an even better value for their voice and data services. ATI met our acquisition criteria, i.e., they are focused on the medium and small business segment, they exist primarily in our current markets, they are EBITDA positive, and we forecast them to be cash flow accretive within 24 months,", said Smith. ",Strategically, this is an excellent opportunity for ATI, its employees and customers,", said Dave O`Neill, President of Advanced TelCom, Inc. ",By joining Eschelon, ATI will become part of a leading competitive local exchange carrier. This will allow Eschelon and ATI to do what they do best, which is providing voice and data telecommunications solutions. This is a winning transaction for all involved,", said O`Neill. ",The transaction provides Eschelon with increased market share in existing markets while adding two new facilities-based markets,", explained Smith. ",After the completion of the transaction, Eschelon will be a larger organization with deeper market coverage. This, along with our strong balance sheet, positions us well for future market consolidation opportunities.",