CoServ Realty Transfers All Assets to Lender; First of Three CoServ Plans to Emerge From Chapter 11 Process.

Business Editors

CORINTH, Texas--(BUSINESS WIRE)--Oct. 11, 2002

CoServ Realty Holdings, L.P. today announced that its Chapter 11 plan previously confirmed by the U.S. Bankruptcy Court has become effective, making it the first of three CoServ Chapter 11 plans to emerge from bankruptcy protection.

As part of the plan and in connection with the plan becoming effective today, CoServ Realty immediately transferred all of its assets to affiliates of National Rural Utilities Cooperative Finance Corporation (CFC), its secured lender. The asset transfer to CFC affiliates consists primarily of residential and commercial development loans, and also includes the ownership of The Westin Beechwood Hotel and the Troon Golf-managed Creeks at Beechwood golf course, which were acquired by CoServ Realty through foreclosure in 2001.

"While the golf course has been challenged by the oversupply of golf courses in the area, the hotel has performed remarkably well during its first year of operation," said Donnie Clary, chief financial officer of CoServ. "We have been extremely pleased with the management of these properties by Westin, Troon and Quorum Hotels during our ownership."

CoServ Realty along with CoServ Electric, CoServ Telecom Holdings, L.P. and their related sister entities announced on June 26, 2002 that Chapter 11 plans had been filed with the court, which embodied the restructuring agreement reached with CFC. CoServ Electric's plan was confirmed on Sept. 11, 2002, and a confirmation hearing on the CoServ Telecom plan is scheduled for Oct. 25. The plans for CoServ Electric and CoServ Telecom and their related sister entities are projected to become effective later this year.

"Finalizing the CoServ Realty plan represents the next step toward bringing the entire CoServ family of companies out of the reorganization process," said Bill McGinnis, chief executive of CoServ Electric. "It's important to note that the CoServ Realty plan produces a very favorable result for CoServ. The transferred assets were acquired by CoServ Realty through loans from CFC, and we were able to negotiate an agreement where CFC gave us a 100% credit against the related debt."

For nearly 65 years, CoServ Electric has provided dependable, affordable electric power to thousands of customers in the North Texas area. In 1998, the company expanded both its service area and its service offerings to include a broad range of services. CoServ currently provides a wide variety of services, including electric, gas, telephone, cable television, security and Internet to several counties in North Texas. Further information on CoServ Electric is available at www.coserv.com.