Dixie National Corporation makes announcement.

JACKSON, Miss.--(BUSINESS WIRE)--July 19, 1995--Dixie National Corporation (NASDAQ:DNLC) of Jackson, Mississippi, announced today that it had acquired a 16% equity interest in Phoenix Medical Management under terms of an agreement announced last April, but had decided not to exercise its related option to acquire the balance of the Arizona-based healthcare management company.

In fulfillment of the agreement, Dixie had previously issued 2,000,000 new shares of its common stock to the owners of Phoenix Medical Management in exchange for the 16% stake. Phoenix Medical Management shareholders will retain 100,000 shares of DNLC stock which Dixie paid for the option forfeited by today's announcement. The option gave Dixie the right until December 31, 1995, to acquire the remaining 84% of Phoenix Medical Management for 10,400,000 shares of DNLC stock.

Phoenix Medical Management was organized to develop and manage a proprietary multi-state network of medical facilities for its wholly-owned subsidiaries, American MedNet Centers and SurgiNet. Each American MedNet facility is designed and equipped to offer multi-modality pain management programs, psychological and physical rehabilitation programs, and to generate ancillary revenues by accommodating non-affiliated surgeons who perform their own surgical procedures at the SurgiNet centers. The company has developed and test marketed the American MedNet/SurgiNet concepts in facilities in Arizona and Louisiana over the past two years, and its Phoenix center has been in trial operation since January 1995. The facility began normal operations in April and received Medicare certification in June as a fully licensed and functional outpatient surgery center. Additional clinics were originally scheduled to open in Lafayette and New Orleans, Louisiana, in late 1995, but PMM management recently decided to strategically focus initial expansion activities in the Arizona market.

Commenting on today's announcement, Dixie's Chairman and CEO Leroy Reed said, "With the previously announced sale of our Dixie National Life Insurance subsidiary anticipated to close within the next 90 days, we have been actively examining several advanced technology and health care companies, including Phoenix Medical Management, for possible future acquisition. Our flexibility in these negotiations is enhanced by canceling the current PMM option, even though we remain very optimistic about the prospects of PMM eventually becoming a major player in the changing U.S. health care delivery system. Dixie is in complete agreement with the decision by PMM's management to concentrate first on markets close to home, and we plan to retain our 16% ownership as a strategic investment."

CONTACT: Dixie National Corporation, Jackson

Robert Neal, 601/982-8210