EMBARGOED UNTIL MONDAY MORNING - 10/9/00
TESSERACT AND SUNRISE ANNOUNCE CHAPTER 11 FILINGS;
SCHOOLS REMAIN OPEN AND FULLY OPERATIONAL
Contact: Dr. Lucian Spataro
(480) 940-6409
Phoenix, Arizona, October 6, 2000 - THE TESSERACT GROUP, INC. ("TesseracT")
(OTCBB: TSST) reported today that it, along with its wholly-owned subsidiary
SUNRISE EDUCATIONAL SERVICES, INC. ("Sunrise"), filed voluntary petitions under
Chapter 11 of the Bankruptcy Code on October 6, 2000. TesseracT is a national
leader in the operation of quality education programs through private and
charter schools, and Sunrise owns preschools in Arizona which are part of the
overall operations of TesseracT.
Dr. Lucian Spataro, TesseracT's president and chief executive officer,
stated "TesseracT and Sunrise have filed for Chapter 11 protection as part of an
ongoing effort to work out our financial problems with creditors while working
in the best interests of students, employees and other interested parties.
TesseracT's and Sunrise's school facilities remain open and fully operational."
Dr. Spataro further stated: "Chapter 11 reorganization is designed to allow a
business that is experiencing financial difficulties to restructure its business
affairs." The companies believe that their normal operations will not be
interrupted by the Chapter 11 filings.
Prior to the Chapter 11 filings, TesseracT and Sunrise received a loan
commitment of up to $1.2 million from TAI, LLC, for a line of credit to finance
post-petition operations in the event cash flow of the companies are not
sufficient to fund operations. This post-petition financing is subject to Court
approval.
STATEMENTS MADE IN THIS PRESS RELEASE THAT ARE NOT HISTORICAL FACTS MAY BE
DEEMED FORWARD-LOOKING STATEMENTS, AND, AS SUCH, ARE SUBJECT TO CERTAIN RISKS
AND UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED
AS A RESULT OF THESE CERTAIN RISKS AND UNCERTAINTIES, INCLUDING, BUT NOT LIMITED
TO, (I) THE ABILITY OF THE COMPANY TO NEGOTIATE SATISFACTORY TERMS WITH LENDERS,
VENDORS AND CREDITORS; (II) THE ABILITY OF THE COMPANY TO OBTAIN COURT APPROVAL
OF POST-PETITION FINANCING OR THE AHWATUKEE SCHOOL SALE; (III) FURTHER
DETERIORATION OF THE COMPANY'S FINANCIAL PERFORMANCE; (IV) DECLINE IN STUDENT
ENROLLMENT; (IV) ADVERSE CHANGE IN THE COMPANY'S BUSINESS RELATIONSHIPS WITH
VENDORS AND SUPPLIERS; (V) LOSS OF KEY PERSONNEL; AND (VI) ADVERSE ECONOMIC
CONDITIONS. FURTHER INFORMATION CONCERNING FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS ARE
CONTAINED FROM TIME TO TIME IN THE COMPANY'S SEC FILINGS.
