XO Won't Drop Stock Agreement

RESTON, Va. -- XO Communications, Inc. (OTCBB:XOXO) issued the following statement today in response to a letter delivered by attorneys for partnerships affiliated with Forstmann Little & Co. and Telefonos de Mexico, S.A. de C.V. (TELMEX) asking XO to release Forstmann Little and TELMEX from their obligations under their existing stock purchase agreement. "As acknowledged by counsel for Forstmann Little and TELMEX in their letter, the stock purchase agreement among XO, Forstmann Little and TELMEX remains in full force and effect. We do not believe that the investors have any right to terminate their obligations unilaterally, and see no reason to believe that the closing conditions cannot be satisfied. "However, if for any reason the Forstmann Little/TELMEX agreement fails to close for any reason, it is important to note that in recent weeks XO has made substantial progress with the steering committee of its senior secured lenders to formulate a standalone plan which would come into effect in that event. "We flatly reject the investors' notion that it is 'virtually impossible' for the conditions to the investors' obligations to be fulfilled. We believe that our operating results for the first quarter, which reflected improved EBITDA performance, and the dismissal last week of the class action litigation that was pending in the Federal Court in Virginia constitute significant progress toward meeting the conditions of the stock purchase agreement. Under the circumstances, we are obviously not in a position to terminate the stock purchase agreement without substantial consideration. We remain confident that so long as the investors fulfill their obligations under the agreement including the obligation to use reasonable best efforts to take actions necessary to complete the transactions, the conditions can be fulfilled and the transactions consummated." XO Communications Inc.