David Lazzarato

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David Lazzarato

• Executive Vice President
• Chief Financial Officer

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Anatomy of a Restructuring

• And the Afterlife

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Overview of the Telecom Build-up

• Deregulation in long distance and local _leads
  to emergence of many new players
• Promise of Internet driven demand for _bandwidth
  fuels vast network deployment
• Industrys limitless access to capital leads
  __to overbuild well over 10 billion in
  __Canada alone
• Industry bust eliminates most new _entrants,
  different capital structures remain

Telecom Became A Four Letter Word To Investors
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The Realization Point

• Equity holders guaranteed pay-out under
  __back-end deal with ATT
• Back-end did not refer to bondholders
• National infrastructure in place
• Lower market growth prospects
• Predecessor had 4.7 billion in debt

KNOW WHEN TO ACT
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Three Point Plan - May 2002

• To position ourselves for long-term success we
  established a three point action plan
• Significantly improve operational and capital
  efficiencies
• Work to achieve a balanced industry regulatory
  framework
• Establish a sustainable capital structure

Positioning The Company For Long-term Success
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Delivering On The Plan

• Operational and capital efficiencies
• Reduce focus on small business
• Over 100 million annualized savings
• Achieve capital efficiency of 10 revenue
• Balance industry regulatory framework
• Incremental decisions focus on cost savings and
  limiting anti-competitive incumbent behaviours
• Establish a sustainable capital structure

DO WHAT YOU SAY YOU WILL DO
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The Challenge

• Recognize all stakeholders
• Understand their positions
• Assemble team including advisors
• Develop a communications strategy
• Execute on core business without __interruptions

ACT WITH URGENCY
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The Stakeholders

• Banks (secured)
• Equity holders
• Bondholders
• ATT Corp.
• Customers
• Suppliers
• Ontario Superior Court of Justice
• U.S. Bankruptcy Court - Southern District
• of New York

• Board of Directors
• DO liability insurers
• Auditors
• Employees / unions
• Pensioners
• Government / regulator

RECOGNIZE THAT ALL ARE CRITICAL TO SUCCESS
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The Deal

• ATT fulfills obligation to buy 100 of equity
• 4.7 billion in debt to be exchanged for
• 200-240 million cash, 93 new equity
• ATT to receive initial 7 equity position moving
  to 10 in year four and five
• Non-Canadian bondholders receive limited
  __voting shares
• File for CCAA with pre-approved plan (October
  15)
• Continue serving customers and paying employees
  and ongoing suppliers without interruption

The Deal
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The CCAA Process

• ATT intentions change
• Required to establish new brand, new plan
• Communicate, communicate, communicate
• 99 of total value of affected claims __approve
  plan February 20
• Emerge from CCAA April 1, 2003 - begin __public
  trading same day

Things Will Change
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Our Capital Structure Before After
(C in Millions)
3.2 billion tax loss carry forwards
Our Capital Structure Before After
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Post-Restructuring The Afterlife
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Its All About Execution

• In addition to our restructuring, in 2003 we
• Further strengthened our management team
• Established new corporate brand in Allstream
• Launched record number of new products
• Improved customer satisfaction
• Won new customers, renewed existing business
• Developed a culture of employee accountability
• Generated 141M in FCF paid 70M dividend

Well Positioned To Move Forward
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Ongoing Productivity Gains

• Continually improving customer-facing processes
• Concurrently generating operating efficiencies
  through productivity gains

Demonstrated Ability to Enhance Customer
Satisfaction While Improving Operating Results
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Growth in EBITDA and Cash
Demonstrated Ability to Improve Operating Results
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Share Performance Versus Indices
Share Performance April 1 to December 31
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2004 - Focused On Profitable Growth

• Core Business
• Leverage rich customer base and solid service
  platform
• Next generation service development
• Expanded distribution channels
• Eye to the Future
• Pursue opportunities to reduce cost structure
  with disruptive technologies
• Expanding offerings to participate in
  consumer/small business markets

Firmly Grounded in Executing Our Core Business
Plan, While Maintaining an Eye to the Future
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Positioned For Long-term Success

• Canadas largest alternative _communications
  solutions provider to _medium and large
  enterprises
• Blue chip customer base
• National network infrastructure
• Broad product set and solutions capability
• Experienced management team
• Debt free, positive cash flow and net _income

Capital Structure Is Now A Strength
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Lessons Learned

• Know When to Act
• Act With Urgency
• Recognize All Stakeholders Are __Critical to
  Success
• Do What You Say You Will
• Communicate Continually With All Stakeholders

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David Lazzarato

• Executive Vice President
• Chief Financial Officer

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