CoServ Telecom Holdings, L.P. Secures DIP Financing.

Business Editors & High Tech Writers

CORINTH, Texas--(BUSINESS WIRE)--May 30, 2002

CoServ Telecom Holdings, L.P. today announced that a Debtor-in-Possession (DIP) financing commitment for $7.8 million has been secured from the National Rural Utilities Cooperative Finance Corporation (CFC) that will fund its telephone and cable businesses into next year.

The telephone and cable businesses of CoServ filed for Chapter 11 reorganization protection on November 30, 2001 while a buyer for these businesses was sought. On February 25, the company announced an agreement to negotiate a restructure of the telephone and cable companies, and the new financing agreement is the result of that negotiation process.

"The DIP financing provides the resources for our operational needs as we emerge from the reorganization process and move forward serving our customers," said Jim Chism, Division President of CoServ Communications. "This financing is therefore an important part of providing our telephone and cable customers with continued high levels of service. Additionally, we continue to evaluate potential purchasers for these businesses, and we remain optimistic that we will complete in the near future our search for a buyer that meets our high standards of customer service."

For nearly 65 years, CoServ Electric has provided dependable, affordable, electric power to thousands of homes. In 1998, CoServ Electric expanded both its service area and its service offerings to include a broad range of services, including telephone and cable. Further information on CoServ Electric is accessible at www.coserv.com and information on its telephone and cable companies can be found at www.coservcom.com.