================================================================= PSINET BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2001 (ISSN XXXX-XXXX) June 12, 2001 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 609-392-0900 FAX 609-392-0040 ----------------------------------------------------------------- PSINET BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, On an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtors' cases. Each issue is prepared by Peter A. Chapman, Editor. Subscription rate is US$45 per issue. Reproduction of PSINET BANKRUPTCY NEWS is prohibited without permission. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO ORDER A SUBSCRIPTION TO PSINET BANKRUPTCY NEWS 00001] BACKGROUND & DISCRIPTION OF PSINET INC. [00002] CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2000 [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING [00004] PSINET DEBTORS' CHAPTER 11 DATABASE [00005] PSINET'S 20 LARGEST UNSECURED CREDITORS [00006] TELUS SUBMITS OFFER TO PURCHASE CANADIAN OPERATIONS [00007] CORI GROUP SUBMITS OFFER TO PURCHASE LATIN AMERICAN UNITS [00008] U.S. TRUSTEE APPOINTS UNSECURED CREDITORS' COMMITTEE KEY DATE CALENDAR ----------------- 05/31/01 Voluntary Petition Date 06/15/01 Deadline for filing Schedules of Assets and Liabilities 06/15/01 Deadline for filing Statement of Financial Affairs 06/15/01 Deadline for filing Lists of Leases and Contracts 06/20/01 Deadline to provide Utilities with adequate assurance 07/30/01 Deadline to make decisions about lease dispositions 08/29/01 Deadline to removal actions pursuant to F.R.B.P. 9027 09/28/01 Expiration of Debtors' Exclusive Plan Proposal Period 11/27/01 Expiration of Debtors' Exclusive Solicitation Period 05/30/03 Deadline for Debtors' Commencement of Avoidance Actions Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 USC Sec. 341 ----------------------------------------------------------------- [00000] HOW TO ORDER A SUBSCRIPTION TO PSINET BANKRUPTCY NEWS ----------------------------------------------------------------- PSINET BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. 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Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- ----------------------------------------------------------------- [00001] BACKGROUND & DISCRIPTION OF PSINET INC. ----------------------------------------------------------------- PSINet, Inc. 44983 Knoll Square Ashburn, VA 20147 Telephone (703) 726-4100 Fax (703) 726-4200 http://www.psi.com PSINet connects businesses in more than 25 countries to the Internet, offering corporate Internet access and private networks, including dedicated and dial-up Internet access; Web hosting, colocation and managed security; consulting solutions; and voice, fax and other audio-video products and applications. PSINet bundles these diverse products into customized packages that provide its customers with complete end-to-end solutions with service level agreements that govern quality of service and delivery. Founded in 1989, PSINet boasts that it serves a quarter of the Fortune 500, as well as governments and educational institutions. The Company provides service to some 88,000 commercial accounts globally, covering approximately 90 of the 100 largest metropolitan statistical areas in the United States and the 20 largest telecommunications markets globally. PSINet's access products are delivered over a global fiber network. These products include dedicated Internet access services, intranet private networking, shared access services, dial access, remote access, and firewall solutions. Additionally, PSINet makes wholesale offerings of access products to provide connectivity to telecommunications carriers and other regional or local internet service providers. As of March 31, 2001, the PSINet's access business had approximately 65,000 accounts, of which approximately 20,000 were U.S. accounts. PSINet has web hosting centers that allow customers to outsource their Internet business environments. The hosting products are integrated with the PSINet global fiber network and include colocation products, managed hosting, shared hosting, web design and multimedia capabilities. To deliver these services, the Company has sixteen hosting centers located in Atlanta, Boston, Dallas, Herndon, Los Angeles, Miami, New York City, Toronto, Amsterdam, Berlin, Geneva, London, Paris, Seoul, Tokyo and Buenos Aires, as well as ten colocation centers. The U.S.-based centers represent approximately 405,000 gross square feet, of which 250,000 square feet are operational. As of March 31, 2001, the hosting business had a total of approximately 23,400 accounts, of which approximately 4,300 are U.S. accounts. Growth through Acquisitions Over the past three years, PSINet has grown in part through an aggressive acquisition program, which included the purchase of 74 companies in the United States and internationally. Additionally, PSINet acquired Transaction Network Services, Inc. in November 1999, renaming it PSINet Transactions Solutions Inc., and Metamor Worldwide, Inc. in June 2000, renaming it PSINet Consulting Solutions Holdings, Inc. PSINet also grew through acquisition of global fiber-based and satellite telecommunications bandwidth through the purchase of indefeasible rights of use ("IRUs") and leases of bandwidth. PSINet also constructed new data centers during this period to expand its hosting business. Between 1998 and 1999, revenues increased 106%. Between 1999 and 2000, revenues increased 86%, with a 208% revenue increase in the hosting business alone. Despite rapidly growing revenues, the Company has historically relied primarily on debt and equity financing rather than operating cash flow to fund capital expenditures and expansion. As of December 31, 2000, PSINet's total indebtedness was approximately $3.7 billion, of which approximately $3.5 billion consisted of senior notes, capital lease obligations and notes payable. These senior notes include approximately $600 million outstanding in aggregate principal amount of 10% senior notes due 2005, approximately $350 million aggregate principal amount of 11-1/2% senior notes due 2008, approximately $1.05 billion aggregate principal amount and approximately Euro 150 million aggregate principal amount of 11% senior notes due 2009, and $600 million aggregate principal amount and Euro 150 million aggregate principal amount of 10"% senior notes due 2006. In 1999, PSINet made an equity offering of 16,000,000 shares of split-adjusted common stock and made a further offering of 9,200,000 shares of 6 3/4% Series C cumulative convertible preferred stock. In 2000, pursuant to an equity offering PSINet sold 16,500,000 shares of 7% Series D cumulative convertible preferred stock. The Restructuring Process Begins During 2000, the Company's ability to access the financial markets -- like that of other telecommunications and Internet companies -- became more difficult as a result of declining investor interest in those industries. These changes in the capital markets not only affected the Debtors' ability to continue to access financing, but also had a negative impact on revenue as many customers, also in the Internet industry, faced similar pressures causing a decrease in demand for access and hosting services. Furthermore, such services became more and more commoditized during 2000 and price became an increasingly important competitive factor, limiting the Company's ability to grow and retain accounts. In 2000, PSINet both continued to focus on integration of the critical assets it had assembled and engaged in multiple restructuring initiatives to deal with what it perceived as substantial changes and challenges in certain of its key businesses. The restructurings involved, among other things, termination of excess circuits and leased facilities, reductions in force, renegotiations of various commitments, closure of facilities and termination of extra bandwidth. PSINet engaged E&Y Capital Advisors LLC in late October 2000 to assist the company in performing an organizational and financial review, and better understand the financial prospects for the business. Further, in November 2000 the Company engaged Goldman, Sachs & Co. to assist them in analyzing financial and strategic alternatives, including a strategic alliance for a possible sale of all or a portion of the company. Strategic initiatives adopted by the Debtors included the divestiture or preparation for divestiture of three businesses that are now considered discontinued operations, including PSINet Transaction Solutions, Inc., which PSINet recently sold for approximately $285 million in cash; Xpedior Incorporated (which filed for bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois on April 20, 2001), an approximately eighty percent owned subsidiary acquired in conjunction with the Debtors' purchase of Metamor; and India/Middle East/Africa (IMEA) operations, consisting of one ISP acquired in late 1999 and disposed of in October 2000. Additionally, PSINet has divested other non-core businesses previously classified as assets held for sale, including PSINet Global Consulting Solutions and Inter.net Global LLC, PSINet's consumer business. Certain other indirect subsidiaries, under non-U.S. laws, have been or are being divested. Notwithstanding management's efforts to cut costs and streamline operations, the Company's obligations remain substantial and overwhelming. Preparing for Bankruptcy In February 2001, the Debtors engaged Wilmer, Cutler & Pickering as its bankruptcy and restructuring counsel. In March 2001, the Debtors engaged Dresdner Kleinwort Wasserstein as its restructuring financial advisors and PricewaterhouseCoopers LLP as its restructuring accountants. All three of these firms have worked with the Debtors in preparing for these Chapter 11 filings, and the Debtors' applications to retain them in the Chapter 11 cases are being filed contemporaneously with the petitions. In March 2001, DrKW began discussions about the Debtors' financial situation and restructuring alternatives with the Debtors' bondholders. An ad hoc committee representing over 70% of the bondholders has formed and retained counsel and advisors. Debtors have opened a dialogue with this committee. The Debtors have received various notices of default relating to nonpayment under equipment leases and other agreements. The Current Situation As of May 2, 2001, the Debtors' cash and cash equivalents on hand, short-term investments and marketable securities totaled approximately $324 million, including approximately $26.5 million in restricted amounts. Taking into account projected monthly cash disbursements and receipts, the Debtors expect to use cash at a rate of approximately $15 million per month. As noted above, since its engagement in November 2000, Goldman, Sachs has been assisting the Debtors in assessing and pursuing strategic alternatives outside the Chapter 11 context, including the sale of all or parts of the business. Likewise, since its engagement in March 2001, DrKW has also been assisting the Debtors in preparing for the Chapter 11 process and exploring and pursuing strategic alternatives in the Chapter 11 context. DrKW expects to have ready for distribution within a few days of the first day hearing an information memorandum concerning the sale of the Debtors' assets. The Debtors, while continuing to pursue potential transactions with candidates who may wish to purchase all or a portion of the Debtors' assets, are simultaneously developing a stand-alone business plan for reorganized continued operations of its core businesses under its newly reconstituted management. ----------------------------------------------------------------- [00002] CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2000 ----------------------------------------------------------------- PSINET INC. CONSOLIDATED BALANCE SHEETS December 31, 2000 ASSETS Current assets: Cash and cash equivalents $491,000,000 Restricted cash and restricted short-term investments 27,400,000 Short-term investments and marketable securities 38,700,000 Accounts receivable, net of allowances of $35,900,000 179,100,000 Prepaid expenses 25,400,000 Other current assets 90,800,000 Net current assets of discontinued operations 26,000,000 -------------- Total current assets 878,400,000 Property, plant and equipment, net 1,243,000,000 Goodwill and other intangibles, net 83,000,000 Other assets and deferred charges 118,700,000 Net non-current assets of discontinued Operations 254,000,000 -------------- Total assets $2,577,100,000 ============== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Current portion of debt $3,680,100,000 Trade accounts payable 304,700,000 Accrued payroll and related expenses 47,000,000 Other accounts payable and accrued liabilities 282,500,000 Accrued interest payable 90,300,000 Deferred revenue 42,300,000 -------------- Total current liabilities 4,446,900,000 Long-term debt 0 Deferred income tax liabilities 17,900,000 Other liabilities 69,300,000 -------------- Total liabilities 4,534,100,000 -------------- Security price protection 65,200,000 -------------- Shareholders' equity (deficit): Convertible preferred stock, Series C 199,900,000 Convertible preferred stock, Series D 790,100,000 Common stock, $.01 par value; 500,000,000 shares authorized; 198,811,155 shares issued 2,000,000 Capital in excess of par value 2,913,000,000 Accumulated deficit (5,893,500,000) Treasury stock, 7,580,166 shares, at cost (4,900,000) Accumulated other comprehensive loss (5,200,000) Bandwidth asset to be delivered under IXC agreement (23,600,000) -------------- Total shareholders' deficit (2,022,200,000) -------------- Total liabilities and shareholders' deficit $2,577,100,000 ============== ----------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING ----------------------------------------------------------------- PSINET FILES FOR CHAPTER 11 IN THE U.S. AND CCAA IN CANADA; SERVICE TO CUSTOMERS WILL CONTINUE AS IT EXPLORES STRATEGIC ALTERNATIVES; COMPANY ANNOUNCES AGREEMENTS FOR SALES OF CERTAIN NON-U.S. BUSINESSES ASHBURN, Virginia -- June 1, 2001 -- PSINet Inc. ("the Company" ) (OTC BB:PSIXE) announced today that it and 24 of its operating subsidiaries in the U.S. have voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. Four Canadian subsidiaries also have filed for protection under the Companies' Creditors Arrangement Act ("CCAA") statutes, enacted in Canada in 1985, in the Ontario Superior Court of Justice. Neither the businesses nor operations of PSINet's operating subsidiaries in Asia, Europe, Latin America or the Company's Metamor consulting business are involved in today's filings. The Company expects that it and all of its subsidiaries will continue to provide reliable service to customers. At the time of the filing, the companies involved in the filings had approximately $300 million of unrestricted cash, cash equivalents, short-term investments and marketable securities on hand. The Company believes this cash balance will provide sufficient financial resources to fully fund operations during the anticipated restructuring period. The Company received a number of offers for debtor-in-possession (DIP) financing. In light of its cash position, the Company declined these offers. As previously announced, the Company has retained Dresdner Kleinwort Wasserstein, Inc. as its investment banker and restructuring advisor. This firm and the Company continue to evaluate all of the Company's strategic alternatives, including the sale of the Company as a going concern, as well as the viability of a stand-alone reorganization. "Our existing capital structure did not permit us to respond to the rapid changes in our markets. We expect that the steps we are taking today will provide us with the flexibility and time to explore all strategic alternatives while we continue to deliver the reliable service upon which our customers depend," said Harry G. Hobbs, president and chief executive officer of PSINet. "We are asking the Courts for permission to continue to pay employees in the normal course and to continue their medical, retirement and other benefits," Mr. Hobbs said. He added that PSINet intends to work through the Courts to maximize the value for creditor constituencies -- and that PSINet and its subsidiaries intend to pay vendors on a timely basis for goods and services they deliver after the filing date. SALES OF CERTAIN NON-U.S. PSINET BUSINESSES PSINet also announced that it has signed a letter of intent with TELUS, pursuant to which TELUS has offered to purchase PSINet's Canadian operations and facilities. The proposed purchase is subject to a number of conditions, including regulatory approval and approval under the bankruptcy proceedings. In Canada, PSINet serves most major markets and provides Internet access, Web hosting, e-security and e-commerce application services to the business and ISP markets. TELUS Corporation is one of Canada's leading telecommunications companies providing a wide range of telecommunications products and services that connect Canada to the World. Additionally, the Company announced that it has entered into a definitive stock purchase agreement for the sale of its operations in Panama to REE Panama, S.A., and has closed on the sale of substantially all of its business operations in Puerto Rico. Terms of these transactions were not disclosed. PSINET BUSINESSES NOT AFFECTED BY ACTIONS The European and Asian subsidiaries -- which were not covered in the filings -- are expected to continue to operate independently, as before the filings. The Company believes that these subsidiaries have sufficient resources to meet their obligations through the restructuring process. PSINet is considering all strategic alternatives for its operations in Latin America, and is in discussions with a potential purchaser group. No assurance can be given that those discussions will result in a sale of the Latin America business. Metamor and its subsidiaries, which also were not included in the filings, continues to operate as before. While Metamor is currently in compliance with its financial obligations, including its convertible subordinated notes, the Company is in discussions with the Metamor note holders. "We are extremely grateful to the customers, employees and other stakeholders who have supported the Company through these challenging times, and we look forward to continuing to serve them during this period of reorganization," Mr. Hobbs said. The law firm of Wilmer, Cutler & Pickering represents PSINet Inc. in its Chapter 11 filings, and Osler Hoskin & Harcourt LLP represents PSINet's Canadian subsidiaries in its CCAA filings. Dresdner Kleinwort Wasserstein, Inc. serves as investment banker and restructuring advisor. PricewaterhouseCoopers LLP serves as financial advisors in the bankruptcy. ABOUT PSINET Headquartered in Ashburn, Virginia, PSINet is a leading provider of Internet and IT solutions offering flex hosting solutions, global eCommerce infrastructure, end-to-end IT solutions and a full suite of retail and wholesale Internet services through wholly-owned PSINet subsidiaries. Services are provided on PSINet-owned and operated fiber, web hosting and switching facilities, currently providing direct access in more than 900 metropolitan areas more than 20 countries on five continents. The company employs approximately 720 people in the U.S., not including 1,550 employees in Metamor and its subsidiaries, 315 people in Canada, 770 in Europe, 600 in Asia Pacific, and 525 in Latin America. At the time of the filing, PSINet had total assets of $2.2 billion and total liabilities of $4.3 billion, of which $2.9 billion is bond debt. ----------------------------------------------------------------- [00004] PSINET DEBTORS' CHAPTER 11 DATABASE ----------------------------------------------------------------- LEAD DEBTOR: PSINet Inc. aka Performance Systems International Inc. aka Internet Access Company Inc. aka Zebra Net, Inc. aka Alpha Dot Net Corp. aka Lyceum Associates Inc. aka IoNET, Inc. aka Telepath Systems, Inc. DEBTOR-AFFILIATES FILING SEPARATE CHAPTER 11 PETITIONS: PSINet New York Shelf, Inc. PSINet Asia Holdings, Inc. Telecom Licensing, Inc. PSI Web Inc. PSINet Security Services, Inc. PSINet Europe, Inc. PSINetworks Company ioCOM, Inc. PSINet Telecom Limited Telecom Licensing of Virginia, Inc. Sports ISP, Inc. PSINet South America Holdings, Inc. R.B. Investments Delaware, Inc. PSINet Miami Management Inc. R.G. Investments Delaware, Inc. TelaLink Corporation Internet Network Technologies, Inc. PSINet Ventures Ltd. PSINet IMEA Holdings Inc. PSINet Realty Inc. PSINet Strategic Investments, Inc. PSINet Strategic Services, Inc. UHF SPU, Inc. International Distribution & Consulting, Inc. COURT: United States Bankruptcy Court Southern District of New York One Bowling Green New York, NY 10004 JUDGE: The Honorable Robert E. Gerber CASE NUMBERS: 01-13213 through 01-13215; 01-13217 through 01-13218; and 01-13222 through 01-13240 PETITION DATE: May 31, 2001 DEBTORS' U.S. COUNSEL: William J. Perlstein, Esq. Wilmer, Cutler & Pickering 2445 M Street, N.W. Washington, DC 20037 (202) 663-6000 Fax (202) 663-6363 Email: bperlstein@wilmer.com DEBTORS' CANADIAN COUNSEL: Osler, Hoskin & Harcourt LLP P.O. Box 50 1 First Canadian Place Toronto, Ontario Canada M5X 1B8 (416) 362-2111 Fax (416) 862-6666 DEBTORS' FINANCIAL ADVISOR: Kenneth A. Buckfire Dresdner Kleinwort Wasserstein, Inc. 1301 Avenue of the Americas New York, NY 10019 (212) 969-2700 Fax (212) 969-7836 DEBTORS' ACCOUNTANTS: Deborah Smith PricewaterhouseCoopers LLP DEBTORS' SPECIAL COUNSEL: Richard F. Langan, Jr., Esq. Nixon Peabody LLP UNITED STATES TRUSTEE: Office of United States Trustee 33 Whitehall Street 21st Floor New York, NY 10004 (212) 510-0500 ----------------------------------------------------------------- [00005] PSINET'S 20 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wilmington Trust Company, 11% Senior Notes $1,050,000,000 Indenture Trustee due2009 Bruce L. Bisson Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 302-651-8584 Wilmington Trust Company, 10% Senior Notes $600,000,000 Indenture Trustee due 2005 Bruce L. Bisson Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 302-651-8584 Wilmington Trust Company, 10.5% Senior Notes $600,000,000 Indenture Trustee due 2006 Bruce L. Bisson Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 302-651-8584 Wilmington Trust Company, 11.5% Senior Notes $350,000,000 Indenture Trustee due 2008 Bruce L. Bisson Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 302-651-8584 Wilmington Trust Company, 10.5% Senior Notes $141,400,000 Indenture Trustee due 2006 ruce L. Bisson (Euro 150.0) Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 302-651-8584 Wilmington Trust Company, 11% Senior Notes $141,400,000 Indenture Trustee due 2009 Bruce L. Bisson (Euro 150.0) Rodney Square North 1100 North Market Street Wilmington, DE 19890-0001 302-651-8584 Nortel Networks Inc. Trade Debt and $99,734,640 1200 Technology Park Drive Leases Billerica, MA 01821 978-439-5800 or 2595 North Dallas Parkway Suite 202 Frisco, TX 75034 Cisco Systems Capital Corp. Trade Debt and $81,013,139 1835 Alexander Bell Dr Leases Suite 10 Reston, VA 22091 703-716-9540 or 170 W. Tasman Drive San Jose, CA 95134-1706 Broadwing Communications Trade Debt $27,452,414 4350 Kennedy Blvd W Tampa, FL 33609 813-289-4330 Leasetec Corporation Leases $26,253,040 1000 South McCaslin Boulevard Superior, CO 80027 Leasetec Corporation 720-304-1143 GE Capital Corporation Trade Debt and $21,287,201 4 N. Park Drive, Suite 500 Leases Hunt Valley, MD 21030 410-527-9300 Lucent Technologies Trade Debt, $20,677,288 2 Gatehall Drive Note Payable Parsippany, NJ 07054 and Leases 800-527-9876 Metromedia Fiber Trade Debt and $17,914,546 Networks Services Inc. Leases 360 Hamilton Avenue White Plains, NY 10601 914-421-6700 Verizon Trade Debt $13,964,135 OC48 RING/PRI-Bell Atlantic Network Services, Inc., Attn: Contracts Management 2980 Fairview Park Drive, 7th Floor Falls Church VA 22042 ACCT-Chris Mogee 11750 Beltsville Dr, FLR 2, Beltsville MD 20705 301-595-2251 & 410-271-1183 Cable & Wireless Network Trade Debt $11,691,563 500 Edgewater Drive Wakefield, MA 01880 (781) 245-5878 Hewlett-Packard Company Trade Debt and $11,509,920 20 Perimeter Summit Leases Boulevard, Atlanta, GA 30319-1417 Dime Commercial Corp. Trade Debt and $9,444,324 1180 Avenue of Leases the Americas, Suite 510 New York, NY 10036 Nissho Electronics Corp. Leases $7,231,849 3-1 Tsukiji 7-Chome Chuo-ku, Tokyo 104-8444 Japan 81-3-3544-8301 EMC Corporation Trade Debt $6,380,933 200 Centreport Dr. Greensboro, NC 27409 336-665-0445 FINOVA Capital Corp. Leases $6,149,718 115 West Century Road Paramus, NJ 07652 201-634-3400 ----------------------------------------------------------------- [00006] TELUS SUBMITS OFFER TO PURCHASE CANADIAN OPERATIONS ----------------------------------------------------------------- BURNABY, British Columbia -- June 1, 2001 -- TELUS and Virginia-based PSINet Inc. have signed a letter of intent (LOI) pursuant to which TELUS has offered to purchase PSINet's Canadian operations and facilities. The LOI was signed concurrently with PSINet Inc.'s announcement of filing for bankruptcy protection. In Canada, PSINet has approximately 275 employees and about 50 points-of-presence, or connection facilities. It serves most major markets in the country, including Toronto, Montreal, Ottawa, Edmonton, Calgary and Vancouver. The company provides Internet access, Web hosting, security and e-commerce application services to the Canadian business and ISP markets. PSINet Canada also delivers consumer and small business Internet services through its wholly-owned subsidiary, Calgary-based CADVision. The company recorded more than $74 million in revenue last year. It has a state-of-the-art Internet data centre in Toronto. PSINet has approximately 8,600 corporate accounts across the country. "The strong data and IP skills of the PSINet employees and the company's impressive customer base are consistent with TELUS' strategic growth initiatives," said Jim Peters, executive vice- president of TELUS Corporate Development. "TELUS proposes to retain PSINet's Canadian-based employees and ensure the service PSINet customers expect, continues." "The transaction would strengthen TELUS' position as one of the leading Internet hosting providers in Canada by combining PSINet's Internet hosting business and data centre with our existing hosting business and newly constructed, national Internet data centres," Peters added. "If we can acquire PSINet's Canadian operations at a price that is cost effective for us, we will accelerate our plans for national business Internet services." TELUS' proposed purchase is subject to a number of conditions, including regulatory approval and approval under bankruptcy proceedings, including the Companies Creditors Arrangement Act in Canada. Decisions are expected by the end of July. TELUS Corporation (TSE: T, T.A; NYSE: TU) is one of Canada's leading telecommunications companies providing a full range of telecommunications products and services that connect Canadians to the world. The company is the leading service provider in Western Canada and provides data, Internet, voice and wireless services to Central and Eastern Canada. For more information about TELUS, visit http://www.telus.com ----------------------------------------------------------------- [00007] CORI GROUP SUBMITS OFFER TO PURCHASE LATIN AMERICAN UNITS ----------------------------------------------------------------- ASHBURN, Virginia -- June 7, 2001 -- PSINet Inc. (OTC BB:PSIXE) today announced that it has signed a letter of intent with an investment group led by Cori Capital Partners, L.P. and consisting of additional investors, including senior members of PSINet's Latin American management team, pursuant to which the investment group has offered to purchase PSINet's Latin American operations and facilities in Argentina, Brazil, Mexico and Uruguay. The proposed purchase is subject to a number of conditions, including regulatory approval and approval under the bankruptcy proceedings. PSINet expects that its operations in Argentina, Brazil, Mexico and Uruguay will continue to operate in the normal course of business, providing reliable services to its customers. PSINet's operating subsidiaries in Latin America are not part of the filing under Chapter 11 of the US Bankruptcy Code. PSINet is considering strategic alternatives for its operations in Chile and is in discussions with a potential purchaser group. No assurance can be given that those discussions will result in a sale of PSINet's Chilean operations. Headquartered in Ashburn, Va., PSINet Inc. is a leading provider of Internet and IT solutions offering flex hosting solutions, global eCommerce infrastructure, end-to-end IT solutions and a full suite of retail and wholesale Internet services through wholly-owned PSINet subsidiaries. Services are provided on PSINet-owned and operated fiber, web hosting and switching facilities, currently providing direct access in more than 900 metropolitan areas in 20 countries on five continents. Cori Capital Partners, L.P. is a private equity vehicle sponsored by Violy, Byorum & Partners Holdings, LLC, CDP Capital International, a subsidiary of Caisse de depot et placement du Quebec (CDP Capital), and Fenway Partners. The investment group has retained Violy, Byorum & Partners Holdings, LLC, as its exclusive financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison as legal counsel. ----------------------------------------------------------------- [00008] U.S. TRUSTEE APPOINTS UNSECURED CREDITORS' COMMITTEE ----------------------------------------------------------------- Pursuant to Section 1102(a) and 1102(b) of the Bankruptcy Code, the United States Trustee appoints the following creditors, being among the largest unsecured claimants, to serve on the Official Committee of Unsecured Creditors in the PSINet, Inc., et al., chapter 11 cases: (1) NTFC Capital Corporation 10 Riverview Drive Danbury, CT 06810 Attn: Robert Wotten Counsel: Madlyn Gleich Primoff, Esq. Paul, Hastings, Janofsky & Walker, LLP 75 East 55th Street New York, New York 10022 (212) 318-6827 (2) Metromedia Fiber Network Services 360 Hamilton Avenue, 7th Floor White Plains, New York 10601 Attn: Robert Sokota (914) 421-6708 (3) Operating Subsidiaries of Verizon Communications, Inc. 11750 Beltsville Drive Beltsville, MD 20705 Attn: Daniel 0. Flagler (301) 595-2131 (4) Morgan Stanley Dean Witter Investment Mgt. 1 Tower Bridge W. Conshohocken, PA 19428 Attn: Deanna Loughnane or Brandon Stranzl (610) 260-7392 (5) Mackay Shields 9 West 57th Street, 33rd Floor New York, New York 10019 Attn: Jordan Teramo (212) 230-3918 (6) Varde Partners, Inc. 3600 West 80th Street, Suite 425 Minneapolis, MN 55431 Attn: George Hicks or Jeremy Hedberg (952) 893-1554 (7) CFSC Wayland Advisers, Inc. 12700 Whitewater Drive Minnetonka, MN 55343 Attn: Joseph Martin Delgman (952) 984-3709 *** End of Issue No. 1 ***