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Neutral Tandem's CEO Discusses Q2 2012 Results - Earnings Call Transcript

We are engaging with commercial banks regarding the debt component of the recapitalization, and anticipate completing the transaction around the end of the third quarter or shortly thereafter.

Of course as indicated in our press release issued earlier today, this plan is contingent on our ability to successfully access the commercial bank market and raise the new debt as well as a variety of other factors described in our press release. Please refer to the press release for a full discussion of those factors.

Raising $75 million to $100 million in debt will lever the company to about 1 to 1.5 times adjusted EBITDA. We believe this level of debt is very manageable. Even after paying out the cash dividend, we will still have about $30 million in cash on the balance sheet.

Additionally, we will continue to have significant capacity to pursue acquisitions, if we identify an asset we would like to acquire. Also we anticipate securing a revolving line of credit that will remain undrawn unless needed at some time in the future.

As also mentioned in our press release, the Board of Directors has authorized the company to repurchase up to $50 million of stock in the open market. The stock repurchase program will expire in three years. We do not currently have any plans to repurchase any stock under this program. But we believe it make sense to have this authorization in place to allow us to repurchase shares opportunistically if price levels become attractive. I want to emphasize however, that in the near-term, it is our intention to pay the special one-time cash dividend and not repurchase shares.

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