Carrier1 in Trouble

LUXEMBOURG -- Carrier1 International S.A. (the "Company") (Neuer Markt:CJN, NASDAQ: CONE) announced today that it is terminating its offers(together, the "Offers") to purchase for cash and shares the Company'soutstanding 13 ¼% Senior Euro Notes due 2009 and 13 ¼% Senior Dollar Notesdue 2009. The Offers were commenced on January 4, 2002 and were due toexpire this evening at 11.59 p.m. New York City time.The Company has been actively pursuing opportunities to enter into apotential strategic transaction which would enable it to continue to fundits operations. However, its identified opportunities have recentlynarrowed. The Company is considering the options available to it andintends to continue to discuss the possibility of a strategic transactionwith a party which has expressed an interest in acquiring the Company'sbusiness. The Company believes that at present there is no prospect of itentering into such a transaction imminently and it is uncertain whether anystrategic transaction will be consummated.In addition, since commencing the Offers, the Company's business hasdeteriorated. The Company and one of its major customers entered into anagreement this week to terminate a long-term contract that was underdispute, resulting in a loss of significant expected revenue. Furthermore,its voice revenues have declined more than anticipated.As at January 29, 2002, the Company had, on a consolidated basis,approximately $90.7 million of cash and cash equivalents, restricted cash(cash that is pledged as collateral on outstanding lines and letters ofcredit and guarantees to telecommunications companies that provide refileservices to the Company) and available-for-sale securities. A substantialportion of this amount, however, is held by the Company's operatingsubsidiaries and is not available to the Company for the purpose of fundingthe Offers.Due to the Company's financial position as described above, the Company hasdetermined that it is not permitted by the law of the jurisdiction of itsincorporation (Luxembourg) to issue the shares offered in the Offers becausethe Notes do not meet certain valuation requirements under Luxembourg lawfor the issuance of shares, as referred to in the Exchange Offers andConsent Solicitations Statement, dated January 4, 2002, relating to theOffers. As a result, an essential condition of the Offers cannot now befulfilled.In light of the above factors, the Company has decided to terminate theOffers.Carrier1 International SA