Otelco Announces Restructuring Transaction

ONEONTA, AL, Feb. 1, 2013 /CNW/ - Otelco Inc. (NASDAQ: OTT; TSX: OTT.un), a 
wireline telecommunication services provider in Alabama, Maine, Massachusetts, 
Missouri, NewHampshire, Vermont and West Virginia, today announced a 
restructuring transaction, which will strengthen the Company by deleveraging 
its balance sheet and reducing its overall indebtedness by approximately $135 
million. Otelco has reached an agreement with its senior lenders to amend 
and extend the terms of its current senior financing through April 2016. In 
addition, our IDS units will be cancelled and the existing senior subordinated 
debt will be converted into equity. The vast bulk of our subordinated debt 
is held in the IDS units, and, as such, our IDS unit holders will continue to 
be significant shareholders of the Company as they are today. These efforts 
will better position the Company to compete in the 21(st) century 
telecommunications marketplace, solve the near-term maturity of the Company's 
senior secured financing, and significantly reduce the Company's debt 
burden. The Company currently has over $32 million in cash and sufficient 
liquidity to consummate this transaction. 
In April 2012, Otelco announced the loss of a material contract to provide 
services to Time Warner Cable (TWC). The Time Warner contract expired on 
December 31, 2012 and TWC elected to begin performing services in-house rather 
than renewing the contract with Otelco. In addition to the loss of the TWC 
contract, recent rulings by the FCC will also continue to negatively impact 
the Company's revenues. After consulting with advisors, the Board of 
Directors and senior management have concluded that reducing the Company's 
debt and improving its capital structure will be best implemented through a 
"pre-packaged" chapter 11 filing, which has the support of the Company's 
senior lenders. 
Before making its chapter 11 filing, Otelco will seek the support of holders 
of record on February 8, 2013, of its senior subordinated notes (including 
notes held in the form of IDSs) for the proposed plan through a solicitation 
process that will occur in February, 2013. The voting process will take 
approximately 35 days. After that period, Otelco intends to voluntarily file 
its reorganization plan with the U.S. Bankruptcy Court in Delaware. 
The chapter 11 process is designed to allow a company to continue its 
operations both during and after the filing. Thus, neither the solicitation 
nor the actual filing is expected to impact Otelco's day-to-day operations. 
Otelco will continue to provide its customers with the quality services they 
have come to expect. "This filing will have no impact on our operations," 
stated Michael Weaver, CEO of Otelco. "Our offices are open, all our 
employees are working and we're still providing excellent service to all our 
customers. We hope to be in chapter 11 for a brief period of time. We have 
significant liquidity and it's business as usual for us." In addition, 
Otelco is, and intends to remain, current with all of its vendors. 
"Our proposed plan, with the extension of the existing senior credit facility, 
will reduce total debt, simplify our capital structure and strengthen our 
balance sheet. I am confident that this restructuring represents the best 
possible outcome for the Company and our IDS unit holders, and I highly 
encourage the IDS holders to support it with a 'yes' vote during the 
solicitation," continued Weaver. 
The Company will hold a conference call to discuss the planned chapter 11 
filing with investors on Friday, February 1, 2013, at 1:00 p.m. (Eastern 
Time). To listen to the call, participants should dial 719-325-4858 
approximately 10 minutes prior to the start of the call. A telephonic replay 
will be available from 3:00 p.m. (Eastern Time) on February 1, 2013 through 
midnight on March 31, 2013 by dialing (719) 457-0820 and entering Confirmation 
Code 3741326. The live broadcast of Otelco's conference call will be 
available online at www.OtelcoInc.com on February 1, 2013, beginning at 1:00 
p.m. (Eastern Time). The online replay will be available at approximately 3:00 
p.m. (Eastern Time) and continue for 60 days. A transcript of the call will 
also be available on the Company's website on Monday, February 4, 2013 by the 
close of business. 
Statements in this press release that are not statements of historical or 
current fact constitute forward-looking statements. Such forward-looking 
statements involve known and unknown risks, uncertainties, and other unknown 
factors that could impact the Company's restructuring plans or cause the 
actual results of the Company to be materially different from the historical 
results or from any future results expressed or implied by such 
forward-looking statements. In addition to statements which explicitly 
describe such risks and uncertainties, readers are urged to consider 
statements labeled with the terms "believes," "belief," "expects," "intends," 
"anticipates," "plans," or similar terms to be uncertain and 
forward-looking. There can be no assurance that the restructuring 
transaction described herein will be consummated. The forward-looking 
statements contained herein are also subject generally to other risks and 
uncertainties that are described from time to time in the Company's filings 
with the Securities and Exchange Commission. 
Otelco Inc. provides wireline telecommunications services in Alabama, Maine, 
Massachusetts, Missouri, New Hampshire, Vermont and West Virginia. The 
Company's services include local and long distance telephone, network access, 
transport, digital high-speed data lines and dial-up internet access, cable 
television and other telephone related services. With approximately 99,000 
voice and data access lines, which are collectively referred to as access line 
equivalents, Otelco is among the top 25 largest local exchange carriers in the 
United States based on number of access lines. Otelco operates ten incumbent 
telephone companies serving rural markets, or rural local exchange carriers. 
It also provides competitive retail and wholesale communications services 
through several subsidiaries. For more information, visit the Company's 
website at www.OtelcoInc.com. 
Contact: Curtis Garner Chief Financial Officer Otelco Inc. 
205-625-3571 Curtis@otelcotel.com 
SOURCE: Otelco Inc. 
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CO: Otelco Inc.
ST: Alabama
-0- Feb/01/2013 11:00 GMT
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