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Exhibit 99.1
LOG ON AMERICA COMMENCES
$100 MILLION ACTION AGAINST
CREDIT SUISSE FIRST BOSTON
Log On America, Inc. (NASDAQ:LOAX) announced today the filing of an action
against Credit Suisse First Boston Corporation (CSFB) seeking recovery of $100
Million for CSFB's gross negligence and material conflicts of interest as LOA's
exclusive financial advisor. The Company alleges that CSFB was grossly negligent
and was deceptive in connection with the structuring and negotiation of the
Company's sale of Convertible Preferred Stock to certain institutional investors
including Marshall Capital Management Inc. ("Marshall"), a subsidiary of CSFB;
and the structuring and negotiation of an equipment purchase agreement and
secured credit facility with Nortel Networks Inc. ("Nortel").
The complaint, which was filed in the United States District Court, Southern
District of New York alleges that CSFB, after being retained by the Company as
its exclusive financial advisor, represented that it would raise substantial
capital for the Company from "name investors" and when it failed to do so,
recommended the Company raise money by issuing floorless Convertible Preferred
Stock and promising to support the Company's stock in the market. One half of
the convertible stock was placed by CSFB with Marshall. The Company has since
sued Marshall and the other holders of the convertible stock alleging market
manipulation. It is further alleged that CSFB negotiated the transaction with
Nortel on unfavorable terms while failing to disclose to LOA that CSFB was also
representing Nortel in other major financial transactions.
David Paolo, President of LOA, commented, "We placed our trust in CSFB to
provide us with guidance and advice in structuring our financial future. They
made promises which were not kept and placed us in a precarious position by
recommending and structuring a floorless convertible financing which is usually
reserved as a financing of last resort for public companies in desperate
financial condition. In contrast, Log On America was financially healthy with
over $20 Million in cash, essentially no debt and an annual burn rate of less
than $5 Million. We intend to recover from CSFB the substantial damage we have
suffered because of its gross negligence and failure to properly and honestly
represent our interests. After Credit Suisse abandoned LOA, they literally
walked away from over $2 Million in fees because they knew how badly they had
handled our account."
About Log On America
Log On America is a solutions-centric, facilities-based Enhanced Communications
Provider (ECP) offering digital transport and application services to small,
medium and large businesses throughout New England. Log On America's core
products and services include local dial tone, in-state toll, long
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distance, high-speed Internet access and office productivity and security
management application services; utilizing a wide range of broadband access and
ASP technologies and partnerships. For more information about Log On America,
please visit our website at www.loa.com.
Forward Looking Statements
Statements made in this news release, including those relating to the filing of
an action against Credit Suisse First Boston Corporation, may contain
forward-looking statements concerning the business and products of the Company.
Actual results may differ materially depending on a number of risk factors
including, but not limited to, the following: development, shipment and market
acceptance and additional competition from existing and new competitors which
will impact new customers. Other risks inherent in the business of the Company
are described in Securities and Exchange Commission filings, including the
Company's prospectus on Form SB-2. The Company undertakes no obligation to
revise or update any forward-looking statements to reflect events or
circumstances after the date of this release.
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Contact:
Investor Access Corp.
Michael Seely, 203/353-8200
or
Log On America
Kenneth Cornell, 401/459-6288
Chief Financial Officer
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