Proposed Transaction

Through the asset purchase agreement and the Court-approved auction process and subject to necessary regulatory approvals, Comtel will acquire substantially all of the assets of the VarTec Companies, including all telecommunications equipment, customer accounts and records, business records and licenses and permits. Pending consummation of the proposed transaction, Comtel also intends to obtain up to approximately $20 to $25 million in debt financing to fund working capital and similar needs of the VarTec Companies. Upon consummation of the proposed transaction, Comtel intends to replace such debt financing with a three to five-year debt instrument of approximately $50 million.

Once the proposed transaction is completed, the VarTec Companies no longer will hold the authorizations to provide telecommunications services. These authorizations will be held by or assigned to Comtel, subject to regulatory approvals, so Comtel can step into the shoes of the VarTec Companies. The VarTec Companies' residential and commercial customers will continue to receive services without interruption. Comtel's initial business plans provide that Comtel's services and geographic areas served will mirror those provided by the VarTec Companies. Service enhancements will be within the existing authority transferred. Comtel will operate under the VarTec Companies' trade names, in addition to the Comtel name.

Following the consummation of the asset transfer, Comtel will be led by a combination of its own management members and certain members of the existing management team of the VarTec Companies, who the Applicants currently expect will continue in management roles for Comtel after consummation of the transaction.