XFONE USA Signs
an Amendment to the Agreement and Plan of Merger
to Acquire I-55 Internet, a Leading Louisiana Based Internet
Service Provider
October 12, 2005
JACKSON, Miss, HAMMOND, La., and LONDON, Oct. 12 /PRNewswire-FirstCall/ -- XFONE USA, Inc., a wholly owned subsidiary of XFONE, Inc. (Amex: XFN), an international diversified communications services company, today announced that it has amended its Agreement and Plan of Merger (the Agreement) to acquire I-55 Internet Services, Inc. (I-55 Internet), one of the largest, privately-held Internet Service Providers (ISP) in the Southeast region of the United States. The Agreement that was signed on August 18, 2005 was amended due to the operational impact of Hurricane Katrina. The parties were unable to close the Merger and decided to allow for re-evaluation of the Merger by way of First Amendment to the Agreement regarding damage caused by Hurricane Katrina to the assets, customer billings and business operations of I-55 Internet.
Hunter McAllister, President and CEO of I-55 Internet, stated, "Given the impact of Hurricane Katrina on the operations of I-55 Internet and its billing base, we have concluded that the Merger will give I-55 Internet the needed financial and operational strength to continue operations and benefit from the synergies that this Merger will bring to a consolidated company. We are very proud of the success we have achieved in building I-55 Internet into a profitable, highly regarded service provider and we look forward to being involved with XFONE USA to achieve our growth initiatives."
XFONE USA further reported that by combining the strengths of XFONE USA and I- 55, this acquisition positions XFONE USA as a compelling and highly competitive force within the industry. Based on the historical financial performances of I- 55 Internet and the operational effect resulting from Hurricane Katrina, XFONE anticipates that their consolidated sales of XFONE USA will reach approximately $13 million in 2006.
The terms and conditions of the transaction after this amendment provide for XFONE USA to pay the current shareholders of I-55 Internet total consideration of $3,854,167, payable in restricted common stock and warrants to purchase common stock of XFONE, Inc. In addition, XFONE USA and I-55 Internet signed by way of a letter agreement dated October 10, 2005, with a major creditor of I-55 Internet whereby this note holder would accept in lieu of cash payment for the outstanding amounts of approximately $1,835,000 owed to it by I-55 Internet, a number of shares of restricted common stock of XFONE, Inc. with a value equal to the payoff amount. The completion of the acquisition is subject to a number of closing conditions, among which include regulatory approvals.
In addition, since it is impossible to currently determine the impact that Hurricane Katrina will have on the business and revenues of I-55 Internet, the parties agreed that the aggregate Merger consideration will be adjusted, if at all, on March 1, 2006 by a formula calculating the February 2006 customer billings compared to July 2005 customer billings for the I-55 Internet customer base.
As part of the amendment, the parties decided to enter into a Management Agreement that provides that I-55 Internet hires and appoints XFONE USA as Manager to be responsible for the operation and management of all of I-55 Internet's business operations. This management agreement shall commence on the date hereof and shall continue until the consummation of the Merger. The management agreement provided that all revenues generated from I-55 Internet's business operations will be assigned and transferred to XFONE USA. The term of the Agreement commenced on October 11, 2005 and continues through the consummation of the Merger.
Commenting on the pending transactions, Wade Spooner, CEO of XFONE USA, noted, "This Merger will clearly strengthen our position in the diversified communications industry. Given the ever changing regulatory environment and the expected reconstruction of the gulf coast of Mississippi and Louisiana communications infrastructures, there exists an exciting opportunity to capture market share and to rapidly expand our operations. XFONE will clearly be a leading force in the reconstruction efforts involving communications. Combining the strengths of XFONE USA and I-55 Internet, this acquisition is positioning XFONE USA as a compelling and highly competitive force within the industry."
About XFONE, Inc.
A U.S.-domiciled corporation, XFONE, Inc. is an international voice, video and data communications services provider with operations in the United Kingdom, the United States and Israel that offers a wide range of services, which include: local, long distance and international telephony services; prepaid and postpaid calling cards; cellular services; Internet services; messaging services (Email/Fax Broadcast, Email2Fax and Cyber-Number); and reselling opportunities. The Company serves customers worldwide. For the Company’s website, please visit: www.xfone.com
This press release contains forward-looking statements. The words or phrases "should," "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." The Company's financial results reflected above should not be construed by any means as representative of the current or future value of its common stock. All information set forth in this press release, except historical and factual information, represents forward-looking statements. This includes all statements about the Company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate; the ability to obtain sufficient funding to continue operations, maintain adequate cash flow, profitably exploit new business, and license and sign new agreements; the unpredictable nature of consumer preferences; and other factors set forth in the Company's most recently filed annual report and registration statement. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the U.S. Securities and Exchange Commission.
| For More Information,
Please Contact: |
| U.S. IR Contact |
Israel IR Contact |
Xfone Contact |
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
Phone: 1-203-972-9200
E-mail: jnesbett@institutionalms.com
|
Zvi Rabin
Kwan Communications
Tel: (Israel) +972 50 560 0140
E-mail: zvi@kwan.co.il |
Niv Krikov
Chief Financial Officer
Phone: + 972.39254446 (Israel)
E-mail: niv@xfone.com |
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