Proposed Transaction

On May 15, 2002, Teleglobe Inc., and certain of its affiliates, including Old Teleglobe, applied for an order in the Ontario Superior Court of Justice, pursuant to the Companies' Creditors Arrangement Act of Canada (CCAA) commencing a restructuring proceeding, and providing Teleglobe Inc. with protection against creditors while a restructuring plan is being formulated.

On May 28, 2002, Old Teleglobe and Teleglobe Inc.'s other U.S. subsidiaries filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware (Bankruptcy Court). The U.S. and Canadian proceedings have been consolidated for procedural purposes and are being administered jointly.

On October 10, 2002, the Bankruptcy Court entered a sale order authorizing Teleglobe Inc. and its U.S. subsidiaries, including Old Teleglobe, to consummate the proposed transaction subject to receipt of the required regulatory approvals.

Pursuant to the proposed transaction, Old Teleglobe has formed New Teleglobe as its wholly-owned subsidiary. Immediately prior to closing the transaction, Old Teleglobe will assign substantially all of its assets, dedicated access customers (Old Teleglobe does not have any end-user customers), and CPCN to New Teleglobe. At closing, Old Teleglobe will transfer all of New Teleglobe's stock to TLGB. As a result, New Teleglobe will succeed to the current business and operations of Old Teleglobe as a wholly-owned subsidiary of TLGB.

The applicants represent that New Teleglobe will have better access to capital than Old Teleglobe. The applicants also represent that the transaction will be transparent to customers. Much of the management of Old Teleglobe will remain with New Teleglobe. The applicants do not anticipate any changes in rates, terms, and conditions of service as a result of the transaction.