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United Payphone Services makes announcements.

PHOENIX--(BUSINESS WIRE)--Dec. 30, 1996--United Payphone Services Inc. (NASD OTC BB: UPAY) announced Monday that it entered into an Asset Purchase Agreement on Nov. 15, 1996, whereby the company sold substantially all of its fixed assets to Tru-Tel Communications L.L.C., a Nevada limited liability company ("Tru-Tel").

On that date the company transferred all of its fixed assets to Tru-Tel. In return the company received $1,711,250 in cash and a secured promissory note of $811,250. The amount of consideration received by the company was determined using the cash-flow method of valuation and is believed by the directors to constitute a fair valuation.

The Tru-Tel Note accrues interest at the rate of 8 percent per annum with monthly payments commencing on Feb. 15, 1997. The final payment of all accrued and unpaid interest and outstanding principal is due on or before Jan. 15, 2002. The Tru-Tel Note is secured by a lien on all of the purchased assets and is personally guaranteed by the principals of Tru-Tel. The company sold its assets as a result of a determination by the directors that a changing regulatory environment and business prospects would have a negative effect on the company's future operations.

The Asset Purchase Agreement prohibits the company from engaging in, either directly or indirectly, in any business which operates public or private pay phones within the state of Arizona. In addition, the company may not install or maintain any phone equipment, or provide related services, for any party to its existing contracts, which were sold to Tru-Tel.

As a result, the company has no business operations at this time. The company currently plans to conduct a search for possible merger or acquisition candidates in another line of business and explore other business opportunities and investments. However, at this time the company has not identified any potential merger or acquisition candidates or business opportunities.

The company also announced that on Nov. 6, 1996, a true bill was returned by the Grand Jury in the United States District Court in Nevada against Michael G. Swan and Claudia Higgins who are former directors and officers of the company. Swan and Higgins are accused of racketeering, RICO violations, securities fraud and wire fraud. All of the charges arise out of alleged activities of Swan and Higgins while serving as directors and officers of the company.

Also named in the indictment was Kevin Orton, the company's former accountant. Swan and Higgins were also named as "other relevant persons and entities," but were not charged in two other indictments, alleging among other things, securities fraud violations, filed respectively on Oct. 30, 1996, and Nov. 6, 1996.

The company was not named as a defendant in the indictments. However, because the indictments relate to activities alleged to have been perpetrated by then officers and directors of the company, there can be no assurance that the indictments ultimately will not have a material adverse effect on the company.

For additional information contact: David Westfere, President, United Payphone Services Inc., 105 E. Ellis, Tempe, AZ 85282, 602/839-9968.

CONTACT: United Payphone Services Inc., Phoenix

David Westfere, 602/839-9968
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Publication:Business Wire
Date:Dec 30, 1996
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