Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Files Class Action Suit Against USN Communications, Inc.

SEATTLE--(BUSINESS WIRE)--Dec. 16, 1998--The following Notice is issued by the law firm of Cohen, Milstein, Hausfeld & Toll, P.L.L.C. on behalf of its client, who filed a lawsuit in the United States District Court for the Northern District of Illinois, on behalf of purchasers of the common stock of USN Communications, Inc. (Nasdaq:USNC - news) during the period between Feb. 4, 1998 and Nov. 3, 1998, inclusive.

The Complaint charges that USNC -- a competitive local exchange carrier -- and certain officers and directors of the Company during the relevant time period violated provisions of the federal securities laws. Specifically, the Complaint alleges that defendants made false and misleading representations in connection with USNC's $128 million initial public offering of 8 million shares of common stock on Feb. 4, 1998 (the "IPO" or the "Offering"). The Complaint alleges that, in the Company's IPO Prospectus and in statements made thereafter, defendants described the Company as being involved in reselling local telephone services and that the Company's business of reselling services was becoming increasingly successful. In truth, however, defendants knew, or were reckless in not knowing, that profit margins on reselling local service made it virtually impossible for that strategy to be profitable and that the Company would be forced to switch to a non-reselling strategy, including the possible building or leasing of its own systems, in order to make the Company profitable. During the Class Period, the Company, in fact, was forced to move away from its pure re-selling strategy and began belatedly, to build its own network. However, the change in strategy was too late, and, as defendants knew all along, required a huge infusion of capital, which the Company did not have. On Nov. 4, 1998, the day after the announcement of massive restructuring and lay-offs in the Company, the stock closed at $3/8 per share -- an all-time low.

Plaintiff's counsel in this action -- Cohen, Milstein, Hausfeld & Toll, P.L.L.C. -- has significant experience in prosecuting investor class actions and actions involving financial fraud. The firm has offices in Washington D.C. and Seattle and is active in major litigation pending in federal and state courts throughout the nation.

The firm's reputation for excellence has been recognized on repeated occasion by courts which have appointed the firm to lead positions in complex multi-district or consolidated litigation. Cohen, Milstein, Hausfeld & Toll, P.L.L.C. has taken a lead role in numerous important cases on behalf of defrauded investors, and has been responsible for a number of outstanding recoveries which, in the aggregate, total hundreds of millions of dollars, or more.

If you are a member of the Class who purchased USNC securities during the period between Feb. 4, 1998 and Nov. 3, 1998, inclusive, you may move the Court, not later than sixty days from Nov. 12, 1998 to serve as lead plaintiff for the Class.

In order to serve as lead plaintiff, you must meet certain legal standards.

If you have any questions about this notice or the action, or with regard to your rights, please contact the following attorneys: Steven J. Toll at 888/240-1238 or 206/521-0080, 999 Third Avenue, Seattle, Washington 98104, or Andrew N. Friedman at 888/240-0775 or 202/408-4600, 1100 New York Avenue, N.W., West Tower, Suite 500 Washington, D.C. 20005.