Kansas City Power & Light acquires DTI Holdings, Inc.

Kansas City Power & Light Company (NYSE:KLT) announced that its subsidiary, KLT Telecom Inc. (KLTT), has agreed on a conditional basis to acquire control of DTI Holdings Inc. (DTI), a St. Louis-based firm which is developing a high-capacity fiber optic network.

Kansas City Power & Light Company (NYSE:KLT) announced that its subsidiary, KLT Telecom Inc. (KLTT), has agreed on a conditional basis to acquire control of DTI Holdings Inc. (DTI), a St. Louis-based firm which is developing a high-capacity fiber optic network.

This transaction, replacing a proposal that was put on hold in October amid volatility in the capital markets for telecom companies, should accelerate the completion and commercialization of DTI's advanced voice and data network.

KLTT will acquire an additional 31.2 percent of the fully diluted shares from Richard D. Weinstein, founder of DTI, under the purchase agreement for $33.6 million in cash. An additional 6 percent of the fully diluted shares will be sought through a tender offer for DTI's outstanding warrants which would result in KLTT owning in excess of 80 percent of DTI's fully diluted shares. Net operating losses of DTI would be allocated to KLTT and its affiliates, except to the extent DTI would otherwise have taxable income in the same tax year.

Under the purchase agreement, Mr. Weinstein will resign as chairman, president and chief executive officer and will retain just over 15 percent of the fully diluted ownership and a seat on the DTI board. The parties have granted put and call options that grant Mr. Weinstein the right to sell and KLTT the right to buy his remaining shares after September 2003 and 2005, respectively, at fair market value with a floor of $15 million. KLTT has also committed to help DTI arrange a revolving credit facility for a minimum of $75 million to complete the construction of the planned DTI network and meet other operating requirements.

The transaction is conditioned upon the successful restructuring of DTI's existing debt, receipt of financing commitments satisfactory to KLTT, and waivers from KLT Inc.'s existing bank group and KLT Inc.'s Board approval. Based on input from DTI's five largest noteholders, DTI will attempt to restructure the existing indebtedness by launching a tender offer to purchase 50.1 percent of its existing 12 1/2 percent Series B Senior Discount Notes (Existing Notes) in a "Dutch auction" at prices between 25 and 40 percent of their principal amount at maturity with a limit of $94 million in total cash paid. In addition, DTI will be seeking a consent solicitation to amend the indenture for the Existing Notes to permit the stock of DTI's operating subsidiary to be pledged to secure the tender offer financing. The amendments will also make certain other changes to the indenture to allow DTI to complete the debt restructuring and to achieve other operating goals. A separate tender offer will be made by KLTT for at least 50.1 percent of the outstanding DTI warrants, originally attached to the Existing Notes, at a price of $1.50 per share equivalent, which is consistent with the price per share being paid to Weinstein.

DTI is the parent of Digital Teleport, Inc., which is creating a fiber optic network to serve customers in 37 states. When complete, the DTI network will provide state-of-the-art digital transmission through approximately 20,000 route miles of fiber optic cable in 23 highly reliable "regional rings,� focusing on underserved secondary and tertiary cities. The network also is linked to major cities coast-to-coast.

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