NEWS!!
AUSTIN, Texas--(BUSINESS WIRE)--Dec. 7, 1998--IXC Communications,
Inc. (Nasdaq:IIXC.O) today announced a transaction with DCI
Telecommunications, Inc. (OTC BB:DCTC.O) involving DCI's taking
management control of a significant customer of IXC which has
defaulted in payments to IXC, and a 5-year commitment by DCI to
utilize significant domestic and international telecommunications
services from IXC. In the transaction, IXC will acquire approximately
$16 million in DCI stock in exchange for approximately $18 million in
amounts owed by the defaulting customer. In connection with the
default, IXC estimates a one-time negative impact on the fourth
quarter of approximately $14 million. The defaulting customer is the
debit-card provider that prompted IXC to take certain reserves, as
described in IXC's recent 10-Q and in a recent news release.
DCI is an international provider of telephone services, including
long distance, prepaid telephone cards and Internet services. IXC will
provide services for DCI throughout Spain, England, Canada, Mexico and
the Far East through their international operating affiliates - MarcaTel
in Mexico and Storm in Europe. "The arrangement with DCI is significant
for both companies. For DCI, IXC's contribution provides the network
and collocation capabilities to significantly expand its international
operations. For IXC, it represents an expanding international presence
and the first time all its operating affiliates have come together
under one customer contract," said John Fleming, president of IXC's
international business.
DCI has agreed to issue approximately 13% of its stock to IXC
(4.25 million shares) with a market value of approximately $16 million
based on the closing price at December 4, 1998. In exchange for the
DCI stock, IXC has canceled amounts owed by the debit card provider of
approximately $18 million. IXC estimates that the total negative
pre-tax impact of this event on the fourth quarter (net of reserves)
will be $14 million. The number of shares of DCI stock held by IXC is
subject to adjustment if the DCI stock price changes.
"This arrangement represents a significant new business
opportunity for IXC going forward, while also providing a favorable
resolution of an unfortunate situation," commented Ben Scott, IXC's
chairman and chief executive officer. "Although the customer default
will have a significant impact on the fourth quarter, the event is
one-time in nature and should not indicate any recurring reduction in
the operating results of IXC. We look forward to a long-term and
mutually beneficial relationship with DCI, both as a significant new
customer and as a strategic investment."
Under the agreements, DCI has a call option to repurchase the
4.25 million shares of its stock from IXC through April 1, 1999 at a
price of approximately $18 million. In the event the call option is
not exercised, there will be an adjustment to the number of shares
owned by IXC on June 1, 1999 if the 15-day volume-weighted average
price for the shares is outside of the range of $4.20 to $5.88. After
the adjustment, if any, IXC will own shares of DCI with a minimum
value of approximately $18 million (if the price is below the range)
and a maximum value of $22 million (if the price is above the range).
Larry Shatsoff, vice president and COO of DCI, stated that this
agreement with IXC is a significant step forward for DCI in its quest
to be an international facilities-based service provider. "We are
extremely pleased to be working so closely with a company of IXC's
global stature and appreciate IXC's confidence in DCI to provide the
services and support necessary to establish such links and services in
Europe," Shatsoff said.
IXC's network-based delivery solutions are designed to address
the speed and capacity requirements of the global communications
market. Having completed the first new coast-to-coast fiber optic
network in the United States in more than a decade, IXC
Communications, Inc. is at the forefront of the industry's new class
of emerging domestic and international carriers. IXC offerings include
private line, broadband, Internet and long distance switched and
dedicated services. IXC is a publicly traded company listed on Nasdaq
under the symbol IIXC. IXC's Web site is at www.ixc-comm.com.
Certain of the above statements set forth management's
expectations or predictions of the future based on current facts and
analyses. Actual results may differ materially from those indicated in
such statements due to actions of DCI or third parties, or other
factors. Additional information on factors that may affect the
business and financial results of IXC can be found in IXC's filings
with the Securities and Exchange Commission.
--30--KO/na*
CONTACT: IXC Communications Inc., Austin
Media Contact:
Melissa Jackson, 512/231-5247
mjackson@ixc-comm.com
or
Investor Contact:
Greta Wiechman, 888/267-9478
gwiechman@ixc-comm.com
KEYWORD: TEXAS
INDUSTRY KEYWORD: TELECOMMUNICATIONS COMPUTERS/ELECTRONICS COMED
INTERACTIVE/MULTIMEDIA/INTERNET
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