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Integra Telecom Repays $160 Million In Original Debt Funding; First In Industry Since 2000 To Repay In Full

Repayment Indicates Solid Internal Cash Flow and Future Growth.

PORTLAND, Ore. — Sept. 27, 2004 — Integra Telecom announces that on Sept. 16 it closed on a $170 million refinancing deal that establishes it as the first major competitive local exchange carrier (CLEC), since the downturn in the capital markets in 2000, to repay in full all of its original debt funding ($160 million). This occurs during an extended period when lenders to the telecommunications industry have accepted partial repayment through financial restructuring or bankruptcies.

The refinancing allows Integra to improve its liquidity and invest its increasing internally generated cash flows into further growth rather than continuing to pay down principal on its original debt. The senior secured debt facility matures in mid-2009 with no amortization payments required until 2006.

"At a time when many key decisions influencing the fate of the Telecommunications Act of 1996 are being debated by congress and the Federal Communications Commission, Integra's achievement illustrates that the legislation is working as intended to foster successful, facilities-based competition such as that embraced by Integra," said Dudley Slater, Integra Telecom chief executive officer. "We are grateful to our committed employees and the tens of thousands of customers who have helped us demonstrate the value Integra Telecom offers the market as a customer service focused alternative to the traditional telephone monopolies."

"We are not aware of any other major competitor that has reached this milestone," said Carlyn Taylor, Senior Managing Director of FTI Consulting, an established telecommunications industry advisor and the placement agent for this transaction. "Through disciplined management, business model innovation, efficient use of capital, and consistently improving financial performance, Integra continues to outperform its peers. Integra has proven itself to be a leader for other companies to follow in the competitive telecommunications industry."

Goldman Sachs Specialty Lending Group led the financing and syndication. "We are proud to secure the confidence of Goldman Sachs and point to this event as further validation of our customer-focused business model and dedicated team of employees," added Slater.

Company Growth

Integra achieved free cash flow positive status in 2003 by generating $121 million in revenues, a 24.3 percent increase compared to 2002, and $28 million in EBITDA. In early 2003, Integra became the first facilities-based CLEC in the 14-state Qwest Communications service territory to be cash profitable - a key indicator of a business's health.

Integra Telecom serves tens of thousands of customers, representing more than one in ten small to mid-sized businesses within the metro areas of Oregon, Washington, Utah, Minnesota and North Dakota. Rather than re-selling the regional Bell network, Integra owns and operates its own switching, data and transport network. Combined with local management and customer service in each market in which it operates, Integra is able to control and maintain the highest levels of quality service.

About Integra Telecom

Integra Telecom is a fast-growing, integrated communications carrier committed to providing a local, high-quality service alternative to the incumbent, monopoly Baby Bell telecom providers. Thousands of commercial customers in the upper Midwest, Mountain and Pacific Northwest regions rely on Integra's voice and data service and embrace the company's practice of providing a local, user-friendly relationship for all voice and data needs. Integra is a privately held company employing approximately 600 people and serving more than 220,000 access lines. Primary equity investors in the company include Bank of America Capital Investors, Boston Ventures, Nautic Partners and Shaw Ventures. Integra Telecom is a registered trademark of Integra Telecom Inc.

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