Digital Teleport Goes Chapter 11

Files voluntary reorganization; obtains $5 million financing

December 31, 2001

2 Min Read

ST. LOUIS -- Digital Teleport Inc. and its holding company, DTI Holdings Inc., today is filing voluntary petitions for Chapter 11 reorganization with the U.S. Bankruptcy Court for the Eastern District of Missouri. The company also announced it has received a commitment for up to $5 million in debtor-in-possession financing to fund continuing operations during its court-supervised restructuring. After reviewing various and previously disclosed strategic alternatives, the regional fiber communications provider for secondary and tertiary markets concluded that Chapter 11 reorganization offers the most attractive opportunity for success. KLT Telecom Inc., a non-regulated subsidiary of Great Plains Energy Inc. (NYSE:GXP), and current majority owner of the company, is providing the DIP financing. Through this restructuring, Digital Teleport expects to eliminate about $300 million in debt and significantly reduce other future commitments. Digital Teleport will use the debtor-in-possession financing plus cash from operations to fund post-filing operating expenses and obligations to suppliers and employees. "During telecom's peak growth years, Digital Teleport pursued an aggressive national expansion at the cost of profitability," said Paul Pierron, president and CEO of Digital Teleport. "We borrowed heavily to acquire fiber network routes that were never put into service. Payments on our bond debt were set to begin in September 2003 and create extraordinary financial pressure." Digital Teleport expects to emerge from reorganization as a stronger, more flexible company with a unique network, a manageable debt load, and a growing base of recurring monthly revenue. Excluding one-time legal and financial expenses associated with its voluntary restructuring, Digital Teleport expects to report positive operating cash flow for January 2002. The company plans to exit the national long-haul business and eliminate non-revenue producing fiber routes. Digital Teleport will focus on operating its traditional core fiber optic network that spans a five-state region in the Midwest. Digital Teleport Inc.

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