PORTLAND, Ore. -- Integra Telecom, Inc., a leading provider of voice, data and Internet communications to business and carrier customers, and its major shareholders have signed agreements with Warburg Pincus, a global private equity firm, whereby Warburg Pincus will invest at least $245 million to obtain asubstantial equityinterest in Integra Telecom. The proceeds from this transaction will be paid to certain existing Integra investors in exchange for outstanding shares. Integra Telecom will continue to operate as a privately held company and will not raise any primary equity in this transaction.

"Warburg Pincus' substantial investment in Integra validates our business model and recognizes the future potential that the company has as the largest, most established competitive local exchange carrier (CLEC) in the Western United States," said Dudley R. Slater, chief executive officer of Integra Telecom, Inc. "This is a tremendous vote of confidence for the success we've accomplished to date and the strong position our team has created in the industry."

Integra announced on March 20, 2007, that it intends to acquire Eschelon Telecom, Inc. The Warburg Pincus equity transaction is separate from, and not required to complete, the Eschelon purchase, which will be financed through committed credit facilities arranged by Deutsche Bank, Morgan Stanley and CIBC World Markets. Upon finalizing the Eschelon acquisition, the combined companies will create the largest, most profitable CLEC in the Western United States. The Eschelon acquisition is expected to close on August 31, 2007.

"Integra has demonstrated the value and increasing differentiation of a well-executed, customer-focused model. We believe the combined company is well-positioned to be the leading competitive alternative for the business market in the Western United States," said Jim Neary, a managing director of Warburg Pincus.

Integra Telecom Inc.