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Icg Communications Inc/DE – ‘PREM14A’ on 7/28/04

On:  Wednesday, 7/28/04, at 2:18pm ET   ·   Accession #:  1035704-4-396   ·   File #:  1-11965

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 7/28/04  Icg Communications Inc/DE         PREM14A                1:835K                                   Bowne BDN/FA

Document/Exhibit                   Description                      Pages   Size 

 1: PREM14A     Preliminary Proxy Statement                         HTML    931K 

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PRELIMINARY COPY

August      , 2004

Dear Stockholder:

      You are cordially invited to attend a special meeting of the stockholders (the “Meeting”) of ICG Communications, Inc. (the “Company”) to be held at the Sheraton Denver Tech Center Hotel, 7007 South Clinton Street, Greenwood Village, Colorado 80112, on September      , 2004, at                     .m., local time.

      At the Meeting, you will be asked to consider and vote upon a proposal to adopt and approve the Agreement and Plan of Merger dated as of July 19, 2004 (the “Merger Agreement”), which provides for the merger of a wholly owned subsidiary of MCCC ICG Holdings LLC, a Delaware limited liability company, with and into the Company (the “Merger”). If the Merger is completed, each outstanding share of the Company’s common stock will be converted into the right to receive $0.75 in cash, without interest. You should carefully read the Merger Agreement, a copy of which is attached as Appendix A to the accompanying proxy statement.

      After careful consideration of the Merger and other strategic alternatives, our board of directors (the “Board”) has unanimously approved the Merger Agreement and has determined that the Merger is advisable, fair to and in the best interests of the Company and its stockholders and creditors. For the reasons set forth in the enclosed proxy statement, the Board recommends that you vote “FOR” the adoption of the Merger Agreement.

      YOUR IMMEDIATE ATTENTION IS REQUESTED. YOUR VOTE IS IMPORTANT.

      We cannot complete the Merger unless the holders of a majority of the outstanding shares of common stock of the Company vote to adopt the Merger Agreement. Only stockholders who hold shares of common stock at the close of business on August 16, 2004, will be entitled to vote at the Meeting.

      You should consider the matters discussed under “Risk Factors and Other Considerations” of the enclosed proxy statement before voting. Please review carefully the entire proxy statement.

      The enclosed proxy statement provides you with detailed information about the Merger. You may obtain additional information about the Company from documents filed with the Securities and Exchange Commission.

      Whether or not you plan to attend the Meeting, please take the time to vote on the proposal by (i) completing, signing and returning the enclosed proxy card, (ii) voting electronically on the Internet or (iii) voting by telephone. If you fail to return your proxy card, the effect will be a vote against the Merger.

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ICG COMMUNICATIONS, INC.

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

       Notice is hereby given that a special meeting of the stockholders (the “Meeting”) of ICG Communications, Inc. (the “Company”) will be held at the Sheraton Denver Tech Center Hotel, 7007 South Clinton Street, Greenwood Village, Colorado 80112, on September      , 2004, at           :           .m., local time, for the following purposes:

      Action may be taken on this proposal at the Meeting or on any date or dates to which the Meeting may be adjourned or postponed. The board of directors (the “Board”) has selected August 16, 2004, as the record date (the “Record Date”) for the Meeting. Only holders of record of shares of the common stock of the Company at the close of business on the Record Date are entitled to notice of and to vote at the Meeting and at any postponement or adjournment thereof.

      As a stockholder of the Company, you have an appraisal right under applicable provisions of Delaware law to receive payment of the fair value of your shares of the Company’s common stock in a state court proceeding. In order to exercise this appraisal right, you must deliver to the Company a written demand for payment for your shares before the approval of the Merger Agreement is voted on at the Meeting, and you must not vote in favor of the approval of the Merger Agreement. Merely voting against the approval of the Merger Agreement or abstaining from voting is not sufficient to perfect your appraisal right. A copy of the Delaware statutory provisions regarding this appraisal right is included as Appendix C to the accompanying proxy statement and a summary of these provisions can be found in the proxy statement under “Stockholder Appraisal Rights.”

      Your vote is important regardless of the number of shares of our common stock you hold. To assure that your shares are represented at the Meeting, we urge you to complete, date and sign the enclosed proxy card and mail it promptly in the postage-paid envelope provided, whether or not you plan to attend the Meeting in person. If you receive more than one proxy card because your shares of common stock are registered in different names or addresses, each proxy card should be signed and returned to ensure that all your shares of common stock will be voted promptly.

      We cannot complete the Merger unless the holders of a majority of the outstanding shares of common stock of the Company vote to adopt the Merger Agreement. Only stockholders who hold shares of common stock at the close of business on the Record Date will be entitled to vote at the Meeting.

      You should consider the matters discussed under “Risk Factors and Other Considerations” of the enclosed proxy statement before voting. Please review carefully the entire proxy statement.

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      After careful consideration of the Merger and other strategic alternatives, our board of directors (the “Board”) has unanimously approved the Merger Agreement and has determined that the Merger is advisable, fair to and in the best interests of the Company and its stockholders and creditors. For the reasons set forth in the enclosed proxy statement, the Board recommends that you vote “FOR” the adoption of the Merger Agreement.

Englewood, Colorado

Please do not send your stock certificates at this time.

YOUR VOTE IS IMPORTANT.

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SUMMARY TERM SHEET

      This Summary Term Sheet highlights selected information from this proxy statement and may not contain all of the information that is important to you. Accordingly, we encourage you to read carefully this entire document, including the appendices, and the other documents to which we refer you. To understand the merger fully and for a more complete description of the legal terms of the merger, you should read carefully this entire proxy statement and the other documents to which we refer you in “Where You Can Find More Information” of the proxy statement. This proxy statement and a proxy card are first being mailed to the Company’s stockholders on or about August 23, 2004.

The Merger

      Subject to the terms and conditions of the Agreement and Plan of Merger, dated as of July 19, 2004 (the “Merger Agreement”), by and among ICG Communications, Inc. (the “Company”), MCCC ICG Holdings LLC (“MCCC”) and MCCC Merger Corp., a wholly owned subsidiary of MCCC (“Merger Corp.”), Merger Corp. will merge with and into the Company (the “Merger”). As a result of the Merger, the Company will become a wholly owned subsidiary of MCCC. For more information, please see “The Merger Agreement.”

What You Will Receive in the Merger

      As of the effective time of the Merger (the “Effective Time”), as a holder of the Company’s common stock, you will be entitled to receive $0.75 in cash for each share of our common stock that you hold, unless you do not vote in favor of the Merger and you properly perfect your appraisal rights under Delaware law. No interest will be paid on the cash merger consideration. For more information, please see “The Merger Agreement — Merger Consideration.”

      Each of our outstanding options or warrants to purchase our common stock (whether or not the option or warrant is vested or exercisable) will be cancelled. Each holder of an option or warrant that is cancelled will receive a cash payment equal to the product of (x) the excess, if any, of $0.75 minus the per share exercise price of each option or warrant multiplied by (y) the aggregate number of shares of the Company’s common stock that would have been issuable had such option or warrant been exercised in full at the Effective Time, less any applicable withholding taxes. Holders of options or warrants having an exercise price equal to or greater than $0.75 per share will not receive any consideration for the cancellation of such options or warrants. For more information, please see “The Merger Agreement — Treatment of Options and Warrants.”

Federal Income Tax Consequences

      If the Merger is completed, the exchange of common stock by our stockholders for the cash merger consideration will be treated as a taxable transaction for federal income tax purposes under the Internal Revenue Code of 1986, as amended. Because of the complexities of the tax laws, we advise you to consult your own personal tax advisors concerning the applicable federal, state, local, foreign and other tax consequences of the Merger. For more information, please see “Certain Federal Income Tax Consequences” for more information.

Opinion of Financial Advisor

      Lehman Brothers Inc. (“Lehman Brothers”) has given an opinion to our board of directors (the “Board”) that, as of July 17, 2004 (the date the Merger Agreement was approved), and based upon and subject to the assumptions, conditions, limitations and other matters set forth in that opinion, the $0.75 in cash per share to be received by our stockholders pursuant to the Merger was fair from a financial point of view to our stockholders. We include the full text of Lehman Brothers’ written opinion in Appendix B to this proxy statement. We urge you to read the Lehman Brothers opinion carefully and in its entirety.

      Lehman Brothers has acted as our financial advisor in connection with the Merger and has provided financial advisory services in connection with other strategic proposals, including our efforts to restructure

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Interests of Certain Persons in the Merger

      Some of our directors and executive officers have interests in the Merger that differ from, or are in addition to, your interests as a stockholder. These interests are summarized below. For more information, please see “Interests of Certain Persons in the Merger.”

      Jeffrey Pearl, Michael Kallet, Richard Fish and Bernard Zuroff, each an executive officer of the Company, are among the participants in the ICG Key Employee Retention Plan (“KERP”) pursuant to which the Company has granted retention awards that are payable in installments vesting on specified dates in 2004 or upon a change of control or termination of employment other than for cause. The Merger will constitute a “change of control” under the KERP. Accordingly, the Merger may accelerate the Company’s obligation to pay retention awards to all participants in the KERP.

      One of the Company’s directors, Timothy F. Price, is a consultant of Cerberus Capital Management, L.P. (“CCM”). Certain affiliates of CCM (collectively, the “Cerberus Parties”) hold, in the aggregate, warrants to purchase 426,316 shares of the Company’s common stock having an exercise price of $0.01 per share. In accordance with the terms of the Merger Agreement, and unless these warrants are exercised before the Record Date, the Cerberus Parties are entitled to receive $315,474 in consideration of the cancellation of such warrants in connection with the Merger.

      Each person who is or was an officer, director or employee of the Company or any of our subsidiaries at or before the Effective Time will be entitled to indemnity by us against any losses, costs, expenses, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation arising out of the fact that such person is or was a director, officer or employee of us or any of our subsidiaries prior to the Effective Time. Directors and officers will be eligible for coverage under our directors’ and officers’ liability insurance policies for acts and omissions occurring before the Effective Time.

      The Company is a party to a Support Agreement dated July 19, 2004 (the “Support Agreement”) with MCCC, Merger Corp., W.R. Huff Asset Management Co., L.L.C. (“Huff”) and the Cerberus Parties. Pursuant to the Support Agreement, Huff and the Cerberus Parties and their officers, directors and certain other related parties will be released by MCCC, the Merger Corp. and us from any and all claims as of the Effective Time. Three of our directors (William J. Connors, Joseph R. Thornton and Timothy F. Price) will be the beneficiaries of this release. Mr. Connors is a manager of Huff and Mr. Thornton is counsel to Huff. Mr. Price is a consultant of CCM.

Certain Stockholders Have Committed to Vote in Favor of the Merger Under the Support Agreement

      Pursuant to the Support Agreement, Huff and the Cerberus Parties have agreed to vote their shares of the Company’s common stock (which constituted approximately 28% of our outstanding shares as of the date of

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No Solicitation of Proposals

      Based on our Board’s determination that the Merger Agreement is fair to and in the best interests of our stockholders and creditors, we have agreed not to, nor permit our subsidiaries to:

      In addition, the Board cannot:

      For more information, please see “The Merger Agreement — No Solicitation of Proposals.”

Conditions to the Merger and Expected Timing

      The completion of the Merger depends on the satisfaction or waiver of certain conditions, including approval of the Merger Agreement by the holders of a majority of the outstanding shares of our common stock entitled to vote at the special meeting of the Company’s stockholders (the “Meeting”). Pursuant to the Support Agreement, the holders of approximately 28% percent of the Company’s common stock assuming the exercise of all warrants having an exercise price of $0.01 per share) have agreed to vote in favor of the Merger. Notwithstanding these voting commitments, your vote is important. For more information, please see “The Merger Agreement — Conditions to Merger.”

      We expect to complete the Merger shortly after all of the conditions to the Merger have been satisfied or waived. We currently expect to complete the Merger in the third or fourth quarter of 2004, but we cannot be certain when or if the conditions will be satisfied or waived.

The Merger Agreement May Be Terminated Under Some Circumstances

      The Merger Agreement may be terminated, and the stockholders will not receive the merger consideration, if:

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      For more information, please see “The Merger Agreement — Termination of Merger Agreement.”

Termination Fee; Expenses

      For more information, see “The Merger Agreement — Termination Fee; Expenses.”

Interim Credit Agreement

      To provide financing for certain restructuring activities, certain expenses and projected cash flow shortfalls pending the Effective Time, the Company, each of its subsidiaries and MCCC have entered into the Credit and Guaranty Agreement dated July 19, 2004 (the “Interim Credit Agreement”) under which MCCC will provide bridge financing to the Company on a senior secured basis. Under the Interim Credit Agreement, on July 19, 2004, the Company borrowed $2.4 million in the form of a term loan and is entitled immediately to borrow additional amounts to finance costs associated with certain restructuring activities and expenses. If our stockholders approve the Merger, we will be entitled to borrow additional amounts under a revolving credit facility as necessary to fund budgeted operating shortfalls. The Company’s subsidiaries have guaranteed all of the obligations under the Interim Credit Agreement. For more information, see “The Interim Credit Agreement.”

Interim Management Agreement

      In accordance with the provisions of an interim management agreement, the form of which was approved by the Board on July 19, 2004 (the “Interim Management Agreement”), following stockholder approval of the Merger, MCCC will be responsible for day-to-day management of the business operations of the Company and certain of its subsidiaries, subject to certain restrictions, including the supervision of the Board. For more information, please see “The Interim Management Agreement.”

Regulatory Matters

      Under the Communications Act of 1934, as amended, the Federal Communications Commission (“FCC”) must approve the transfer of control to MCCC of the Company and those subsidiaries of the Company that hold FCC licenses and authorizations. The FCC must determine whether MCCC is qualified to control such licenses and authorizations and whether the transfer is consistent with the public interest,

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      Certain subsidiaries of the Company also hold licenses and authorizations issued by state public utility commissions. Approximately half of those state commissions must approve the transfer of control of these licenses and authorizations to MCCC and certain other commissions require that formal notice of the transaction be provided. In addition, to the extent that the subsidiaries of the Company that hold state licenses enter into obligations under the Interim Credit Agreement described in “Interim Credit Agreement,” certain state commissions must approve those financing arrangements.

      The regulatory consents and approvals described above may delay or jeopardize completion of the Merger as described move fully in “Regulatory and Other Approvals”.

Stockholders Have Appraisal Rights in the Merger

      Under Delaware law, if you comply with the applicable provisions of the Delaware General Corporation Law, including the requirement that you notify us in advance of the stockholder vote of your intent to exercise your appraisal rights, in the event the Merger is completed, you may elect to receive, in cash, the judicially determined fair value of your shares of our common stock, with interest, in lieu of the merger consideration. For more information, please see “The Merger Agreement — Stockholder Appraisal Rights.”

Recommendation of the Board of Directors

      The Company’s Board has determined, by a unanimous vote, that the Merger Agreement and the Merger are advisable, fair to and in the best interests of the Company and its stockholders and creditors, and has unanimously approved and adopted the Merger Agreement and the Merger. Your Board recommends that you vote “FOR” approval and adoption of the Merger Agreement at the Meeting.

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QUESTIONS AND ANSWERS ABOUT THE MERGER

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RISK FACTORS AND OTHER CONSIDERATIONS

Risk Factors Relating to the Failure to Consummate the Merger

      In addition to other information set forth in this proxy statement, you should consider the following risk factors and other considerations:

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Other Considerations Regarding the Merger

      1. Key institutional stockholders of the Company support, and have committed to MCCC to vote in favor of, the Merger. The holders, collectively, of approximately 28% of the Company’s outstanding common stock as of July 19, 2004 (assuming the exercise of all warrants having an exercise price of $0.01 per share), have entered into an agreement with MCCC, under which they agreed to vote their shares in favor of, and to otherwise support, the Merger. For more information, please see “Meeting of the Stockholders — Record Date; Voting Rights” and “— Vote Required.”

      2. As a result of the Merger, stockholders of the Company will lose any right to participate in any future upside potential in the Company. At the Effective Time, all of the outstanding shares of the Company’s

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      3. The Merger will constitute a taxable event. Stockholders of the Company will realize taxable gain or loss upon the sale of their shares of common stock in connection with the Merger. Stockholders are urged to consult with their tax advisors. For more information, please see “Certain Federal Income Tax Consequences.”

      4. The merger consideration that MCCC deposited in escrow will not be available to stockholders unless the Merger is consummated. MCCC has set aside approximately $6.35 million, representing the full amount of the consideration to be paid to stockholders under the Merger Agreement (the “Deposit”) to ensure the availability of the merger consideration and to provide a source of liquidated damages in the event of a breach of the Merger Agreement by MCCC. The Deposit has been deposited into a segregated third party escrow account administered by JPMorgan Chase pending the Effective Time. However, if the Merger does not take place, the Deposit will not be released for disbursement to the stockholders. Depending on the reason the Merger is not completed, the Deposit will be either disbursed to the Company for general corporate purposes or refunded to MCCC. If the Deposit is disbursed to the Company, it will be subject to the claims of the Company’s creditors, which claims are entitled to priority over the interests of the stockholder in any federal bankruptcy proceeding in respect of the Company.

      5. The Company is subject to “no shop” and other material restrictions under the Merger Agreement affecting its ability to enter into a sales or merger transaction other than the Merger. Under the Merger Agreement, the Company has agreed to refrain from soliciting, initiating, encouraging, discussing, or negotiating third party offers for a takeover proposal or entering into any arrangements requiring it to abandon the Merger unless the Board determines in good faith, after consultation with a nationally reputable financial advisor and its outside legal advisors, that such an arrangement could reasonably be expected to result in a proposal that is superior to the Merger. For more information, please see “The Merger Agreement — No Solicitation of Proposals.” In the event that the Company enters into such an agreement, the Company must pay to MCCC a termination fee of $5.0 million and must reimburse up to $1 million of MCCC’s expenses in connection with its preparation for the merger. For more information, please see “The Merger Agreement — Termination Fee; Expenses.” The Company believes that these provisions may have the effect of discouraging third party proposals.

      6. There will be a lack of public information regarding the Company after the Merger. Following consummation of the Merger, we will be a privately held Delaware corporation with less than 300 holders of our Common Stock. We will de-register our common stock under the Securities Exchange Act of 1934, as amended, which will reduce the information on the Company available to the public.

Risks Related to the Viability of the Company and Our Business

      The Company and its business are subject to a number of significant risks in addition to the risk factors and other considerations relating to the Merger. These risks include, but are not limited to, the following:

      1. A significant portion of our revenue is derived from a small number of large customers and we may not be able to retain them on profitable terms. A significant amount of our revenue has been derived from contracts with certain large customers. In the first quarter of 2004, three customers each represented more than 5% of our revenue: MCI Inc. (“MCI”) and two large national Internet service providers, which we are unable to name due to confidentiality provisions in their service contracts. Revenue from the top three customers accounted for approximately 31% of our first quarter 2004 revenue.

      As discussed below under “Strategic Transaction and Preparations for Bankruptcy,” we executed an agreement with Level 3 Communications, Inc. (“Level 3”) in April 2004. As a result, all revenue from the provision of remote access service, including all revenue from our two large Internet service provider customers, was eliminated effective April 1, 2004.

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      After the completion of the Level 3 transaction, MCI has become our largest customer, with 15% of our ongoing first quarter 2004, revenue (which excludes remote access service revenue). We have two main service agreements with MCI. The first agreement, under which we provide primary rate interface services to MCI, expires September 30, 2004 and, upon expiration, will automatically renew on a month-to-month basis unless either party provides written notice to the other party of its intent to terminate the agreement. ICG must provide 120 days notice of termination and MCI must provide 30 days prior notice. Approximately 43% of our first quarter 2004 revenue from MCI was generated in connection with this agreement. The second agreement, under which we provide private line and switched access services to MCI, expired March 17, 2003. Upon expiration, this agreement automatically renews for successive 1-year periods unless terminated by either party upon written notice not less than 60-days prior to the expiration of the then-current term. As such, the current term expires March 17, 2005. Approximately 47% of our first quarter 2004 revenue from MCI was generated in connection with this agreement. The remainder of the MCI revenue is generated in connection with other service and interconnection agreements.

      In general, upon the contractual expiration of our agreements with our customers, there can be no assurance that customers will elect to continue such agreements. In fact, they may elect to significantly reduce service levels, negotiate lower pricing, or disconnect services completely.

      2. Our success is dependent on the quality of services that we receive from our suppliers. The quality of service that we deliver to our customers may be impacted if there are disruptions in our suppliers’ services or if our suppliers are unable to expand their current levels of services. There are no assurances that interruptions will not occur or that our suppliers will be able to scale the delivery of their services to meet our future needs. Service interruptions and the inconsistent provision of supplier services could produce substantial customer dissatisfaction, which could adversely affect our results of operations and financial condition.

      3. Our success is dependent upon maintaining good commercial relationships with our suppliers, which may be adversely impacted by uncertainty regarding our financial condition. We rely, in part, on other telecommunications service providers to provide us with voice and data communications capacity via leased telecommunications lines. If our current suppliers become increasingly concerned about our financial condition, they may in the future be unwilling to provide or expand their current levels of service to us on commercially acceptable terms. Although additional capacity is available from alternate suppliers, there can be no assurance that we could obtain substitute capacity from other providers at reasonable prices and in a timely fashion if our current providers ceased doing business with us. Our failure to obtain capacity on a timely basis and at reasonable prices from alternate service providers, if the need arises, could also adversely affect our business and financial condition.

      4. Our reciprocal compensation revenue will likely decline as a result of government regulation and the reduction of Internet bound traffic on our network. Reciprocal compensation revenue is derived on a usage basis from terminating other carriers’ traffic, primarily Internet bound traffic, on our network. Reciprocal compensation rates are negotiated elements of inter-carrier compensation established pursuant to interconnection agreements between two parties. If reciprocal compensation rates continue their historical trend, they will continue to decline, as they have in recent years. In addition, as a result of the Level 3 transaction in April 2004, the majority of the Internet bound traffic on our network has been eliminated. Therefore, we believe our future reciprocal compensation revenue will decline significantly.

      5. The introduction of new technologies may reduce the cost of services similar to those that we provide. As a result, our most significant competitors in the future may be new entrants to the telecommunications industry. These new entrants may not be burdened by an installed base of outdated or undepreciated equipment and, therefore, may be able to more quickly respond to customers’ demands at lower prices. In addition, we may be required to shorten the estimated economic lives of our existing network infrastructure assets, which could materially increase our depreciation expenses.

      6. Our pursuit of necessary technological advances may require substantial time and expenses. Integrating new technologies into our network, when necessary, may prove to be difficult and expensive, and technological upgrades to our network may not become available in a timely fashion at a reasonable cost, or at all. If the technology choices we make prove to be incorrect, ineffective or too costly, our objective of meeting

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      7. Many of our competitors have superior resources, which could place us at a cost and price disadvantage. The telecommunications industry is extremely competitive, particularly with regard to pricing for services and service levels. Many of our current and potential competitors have substantially greater market presence, engineering, technical and marketing capabilities and financial, personnel and other resources than we do. Some also have more established brand names and larger customer bases to better promote their services. As a result, some of our competitors can raise capital at a lower cost than we can, and they may be able to adapt more swiftly to new or emerging technologies and changes in customer requirements, take advantage of acquisitions and other opportunities more readily, and devote greater resources to the development, marketing and sale of products and services than we can. Some of our competitors also have a greater ability to sustain temporary and prolonged operating losses and negative cash flows because of their greater financial resources. If we fail to effectively compete with our competitors, our market share could decrease and the value of our common stock could be further negatively impacted.

      8. The oversupply of telecommunications network infrastructure has resulted, and may continue to result, in decreasing prices, which could have a material impact on our results of operations. The immense capital investment made in the telecommunications industry in recent years has resulted in an oversupply of network infrastructure and capacity. Combined with this oversupply, rapid technological advancements and intense competition have resulted in significant pricing pressure in each of our main service areas. We cannot predict what impact such oversupply of network infrastructure and capacity will have on our future operating results. There can be no assurance that sufficient demand will exist for our services or that prices will not continue to decline.

      9. Our Board is controlled by two stockholders; their interests may conflict with each other and the interests of other stockholders. Currently, Huff and the Cerberus Parties each beneficially own approximately 14.7% and 16.5%, respectively, of our common stock as of [                     ], 2004. See “Security Ownership of Certain Beneficial Owners & Management.” As a result they have significant voting power with regard to all matters requiring stockholder action. They also control our Board. Pursuant to our certificate of incorporation and our by-laws, our Board is comprised of five directors, with the Company currently being obligated to nominate for election (in connection with any meeting of or written consent solicited from our stockholders called for the purpose of electing directors) two individuals designated by the Cerberus Parties, two individuals designated by Huff and the individual acting as our Chief Executive Officer. The number of directors comprising our Board may only be increased above five by the affirmative vote of all but one of the directors then in office. Additionally, the provisions of our by-laws regarding each of Huff’s and the Cerberus Parties’ director nomination rights may not be amended, altered or repealed without their prior consent unless the Cerberus Parties, with respect to their director nominees, and Huff, with respect to its director nominees, in each instance, beneficially own less than 1% of our shares of common stock at the time of the amendment. At present, there are only four directors on the Board: two directors nominated by Huff and two directors nominated by the Cerberus Parties. Consequently, it is likely that, for the foreseeable future, Huff and the Cerberus Parties will have the collective ability to control all matters requiring Board action, including potential financing transactions, mergers and acquisitions, sales and other dispositions of assets, the nomination of directors and our overall management and the determination of our policies. In certain circumstances, the interests of Huff and the Cerberus Parties may not coincide with our other stockholders’ interests, and in some cases the respective interests of Huff and the Cerberus Parties may not coincide with each other. This may make the value of our stockholders’ investments less attractive to potential buyers and less valuable generally.

FORWARD-LOOKING STATEMENTS

      This proxy statement contains forward-looking statements that are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended. Statements that are predictive

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MEETING OF STOCKHOLDERS

      WE ARE FURNISHING THIS PROXY STATEMENT TO STOCKHOLDERS OF THE COMPANY AS PART OF THE SOLICITATION OF PROXIES BY THE BOARD FOR USE AT THE MEETING.

Date, Time and Place of the Meeting

      The Meeting will be held at                     , on September      , 2004, at           :           .m., local time, at the Sheraton Denver Tech Center Hotel, 7007 South Clinton Street, Greenwood Village, Colorado 80112.

Purpose of the Meeting

      At the Meeting, you will be asked to consider and vote on the following proposals:

      The Board has unanimously approved the Merger and the Merger Agreement and has determined that the Merger and the Merger Agreement are advisable, fair to and in the best interests of the Company and its stockholders and creditors. The Board has unanimously directed that the Merger and the Merger Agreement be submitted to the stockholders for their approval. The Board unanimously recommends that you vote “FOR” the approval of the Merger and the Merger Agreement.

Record Date; Voting Rights

      The Board has fixed the close of business on August 16, 2004, as the record date (“Record Date”) for the determination of stockholders of the Company entitled to receive notice of and to vote at the Meeting. At the close of business on the Record Date, there were [8,473,684] shares of the Company’s common stock outstanding and entitled to vote. Stockholders of record on the Record Date will be entitled to one vote per share held of record on the Record Date.

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      Directors and officers of the Company will be entitled to vote with respect to shares of the Company’s common stock held by them. As trustee of a trust for the benefit of the holders of general unsecured claims in the Company’s former bankruptcy proceedings, the Company intends to vote an aggregate of 160,662 shares of common stock in favor of the Merger. In addition, under the Support Agreement, Huff and the Cerberus Parties, collectively the holders of [2,342,636] shares of Company’s common stock as of August [     ], 2004, have committed to vote all of their respective holdings in favor of, and to otherwise support, the Merger. Notwithstanding such commitments, your vote is important.

Quorum

      The presence at the Meeting, in person or by proxy, of at least one-third of the outstanding shares of the Company’s common stock will constitute a quorum. If a stockholder abstains from voting but returns a valid proxy or attends the Meeting, that stockholder’s shares will be counted for purposes of determining the existence of a quorum. Broker non-votes also will be counted for purposes of determining the existence of a quorum. A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner. Under applicable rules, brokers, banks and other nominees may not exercise their voting discretion on the proposal to approve and adopt the Merger Agreement, and, for this reason, may not vote shares held for beneficial owners without specific instructions from the beneficial owners.

Vote Required

      We cannot complete the Merger unless the holders of a majority of the outstanding shares of the Company entitled to vote at the Meeting vote in its favor. As of the Record Date, an aggregate of [8,473,684] shares were outstanding. Huff and the Cerberus Parties, the holders as of the Record Date of an aggregate of [2,342,636] shares of the Company’s common stock outstanding on such date (constituting on such date approximately [28]% of such shares), agreed to vote in favor of the Merger. A failure to vote, an abstention from voting or a broker non-vote will have the same legal effect as a vote cast against approval of the Merger and the Merger Agreement. YOUR VOTE IS IMPORTANT!

Shares Held By Bank, Brokerage Firm or Nominee

      If you hold your shares through a bank, brokerage firm or nominee, you must instruct your bank, brokerage firm or nominee as to how to vote your shares, following the directions contained in the voting instruction card from such bank, brokerage firm or nominee. If your fail to instruct your broker to vote, it will have the same effect as a vote against the Merger.

      If you are a beneficial owner of shares of the Company’s common stock held by a broker, bank or other nominee (i.e., in “street name”), you will need proof of ownership to be admitted to the Meeting. A recent brokerage statement or letter from a bank or broker indicating that you were the beneficial owner of the Company’s common stock on the Record Date is valid proof of ownership. If you desire to vote shares of the Company’s common stock held in street name in person at the Meeting, you will have to obtain a written proxy in your name from the broker, bank or other nominee who holds your shares.

Voting and Revocation of Proxies

      You may vote on the matters presented either in person at the Meeting or by proxy. Shares of the Company’s common stock represented by a properly signed proxy which is received at or prior to the Meeting, unless subsequently revoked, will be voted at the Meeting in accordance with the instructions on the proxy. If a proxy is signed and returned without indicating any voting instructions, shares of the Company’s common stock represented by the proxy will be voted “FOR” approval of the Merger Agreement.

      If shares of the Company’s common stock are held in street name, a stockholder will receive instructions from the broker, bank or its nominee holding the shares, which the stockholder must follow in order to have his, her or its shares voted.

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      You may revoke your proxy at any time before the proxy is voted at the Meeting. A proxy may be revoked prior to the vote at the Meeting in any of the following ways:

      Attendance at the Meeting in person will not in and of itself constitute a revocation of a proxy.

Solicitation; Revocation of Proxies

      The Company will bear all expenses of the solicitation of proxies in connection with this proxy statement, including the cost of preparing and mailing this proxy statement. The Company’s stockholder proxies may be solicited by directors, officers and employees of the Company in person or by telephone, facsimile or other means of communication. However, they will not be paid any additional amounts for soliciting proxies. The Company has retained Georgeson Shareholder Communications Inc. to assist the Company in the solicitation of proxies for a fee of approximately $10,000, plus reimbursement of out-of-pocket expenses.

DESCRIPTION OF MERGER TRANSACTION

Parties to the Merger

      The Company, through its subsidiaries, is a business communications company that specializes in converged voice and data services. The Company has a national footprint and metropolitan fiber serving 25 markets. The Company’s products and services include regulated and unregulated services, such as voice and Internet Protocol solutions, including VoicePipe^TM, voice services, dedicated Internet access, and private line transport services. The Company serves corporate customers and inter-exchange carriers with flexible and reliable solutions.

      The Company is a Delaware corporation whose common stock is traded on the OTC Bulletin Board. It does not have any other outstanding class of stock. The address of the Company’s principal executive offices is 161 Inverness Drive West, Englewood, Colorado 80112 and the telephone number is (888) 424-1144 or (303) 414-5000.

      MCCC is a newly organized Delaware limited liability company of which Columbia Capital LLC (“Columbia Capital”) and M/ C Venture Partners (“M/ C Venture Partners”) or their affiliates are the members. The address of the principal executive offices of MCCC is c/o Columbia Capital LLC, 201 North Union Street, Suite 300, Alexandria, Virginia 22334, and the telephone number is (703) 519-2000.

      Columbia Capital is a private equity firm focused exclusively on the communications and information technology industries, investing in both emerging service providers and innovative, next generation technologies. Columbia Capital has invested in more than 60 communications and technology companies since 1989 and currently manages approximately $1.4 billion. Columbia Capital is located in Alexandria, Virginia. Additional information about Columbia Capital can be found at http://www.colcap.com.

      M/ C Venture Partners is recognized as one of the leading venture capital investors in the communications and IT industries. The firm has invested in telecommunications segments for over 20 years and has actively invested in the communications industries for over a decade. M/ C Venture Partners manages over $1 billion in committed capital, with the nation’s largest state and corporate pension funds, prominent university endowments, private trusts, and strategic financial institutions as limited partners. The firm has offices in Boston, London and San Francisco. Additional information about M/ C Venture Partners can be found at http://www.mcventurepartners.com.

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      Merger Corp. is a Delaware corporation recently formed by MCCC as a wholly owned subsidiary for the purpose of effecting the Merger. Merger Corp. will be merged out of existence at the Effective Time. The address of Merger Corp’s principal executive offices is 201 North Union Street, Suite 300, Alexandria, Virginia 22334, and the telephone number is (703) 519-2000.

Merger

      Pursuant to the Merger Agreement, Merger Corp., a wholly owned subsidiary of MCCC, will merge with and into the Company. The Company will survive the Merger and become a wholly owned subsidiary of MCCC. As of the Effective Time, all shares of the Company’s common stock outstanding immediately before the Effective Time will be cancelled and each holder of cancelled common stock will receive in exchange therefor a right to receive $0.75 in cash per share. In settlement of our outstanding options and warrants, MCCC has agreed that, at the Effective Time, it will pay each holder an amount in cash equal to the product of (i) the excess, if any, of $0.75 minus the per share exercise price of each option or warrant multiplied by (ii) the aggregate number of shares of the Company’s common stock that would have been issuable had such option or warrant been exercised in full at the Effective Time, less any withholding tax.

      For additional details regarding the terms and structure of the Merger, please see “The Merger Agreement.”

Interim Credit Agreement

      To provide financing for certain restructuring activities, certain expenses and projected cash flow shortfalls pending the Effective Time, the Company, each of its subsidiaries and MCCC have entered into the Interim Credit Agreement under which MCCC will provide bridge financing to the Company on a senior secured basis. Under the Interim Credit Agreement, on July 19, 2004, the Company borrowed $2.4 million in the form of a term loan. Additionally, the Company is entitled immediately to borrow additional amounts to finance costs associated with certain restructuring activities and certain expenses. Following stockholder approval of the Merger, the Company is entitled to borrow additional amounts under a revolving credit facility as necessary to fund budgeted operating shortfalls. The Company’s subsidiaries have guaranteed all of the obligations under the Interim Credit Agreement.

      Conditions to funding under the Interim Credit Agreement include, without limitation, the following: (i) the Merger Agreement and the Interim Management Agreement, if in effect (see below), shall not have been terminated by any party thereto or breached by the Company; (ii) prior to the date of the Company’s stockholder approval, there must not have occurred any event or change that resulted in or is reasonably expected to result in a material adverse effect on the assets, business or condition of the Company or its ability to consummate the transactions contemplated by the Merger Agreement and related agreements and (iii) there must not be any continuing event of default within the meaning of the Interim Credit Agreement on the borrowing date.

      For additional details regarding the terms and structure of the interim credit facility, please see “The Interim Credit Agreement.”

Interim Management Agreement

      In accordance with the provisions of an interim management agreement, the form of which was approved by the Board and MCCC on July 19, 2004 (the “Interim Management Agreement”), following stockholder approval of the Merger, MCCC will be responsible for day-to-day management of the business operations of the Company and certain of its subsidiaries, subject to certain restrictions, including the supervision of the Company’s Board.

      For additional details regarding the terms and structure of the Interim Management Agreement, please see “The Interim Management Agreement.”

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BACKGROUND OF THE MERGER

Recent Business History of the Company

      In 2002, the Company and certain of its subsidiaries reorganized pursuant to Chapter 11 bankruptcy proceedings. As part of its reorganization, the Company emerged with approximately $85 million in long term debt owed to its bank group and to an affiliate of Cerberus Capital Management, L.P., one of the reorganized Company’s new stockholders (the “Post-Emergence Debt”). The Post-Emergence Debt was secured by a lien on substantially all of the operating assets of the Company and its subsidiaries. The closing price of the Company’s common stock on January 10, 2003, the first date on which shares of the reorganized Company were traded, was $4.00 per share.

      Following its Chapter 11 reorganization, the Company began to encounter financial difficulties arising from a decline in revenues associated with the loss of certain key contracts. In September 2003 we terminated early four dial-up data services agreements with Qwest Communications Corporation (“Qwest”). Qwest, formerly our largest customer, in exchange for a cash payment from Qwest of approximately $106.8 million, which included payment of approximately $31.0 million for dial-up data services provided and to be provided by us under the agreements during the six months ended December 31, 2003, and approximately $75.8 million of early termination revenue. In October 2003 we used approximately $81.2 million of the proceeds from the Qwest transaction to prepay in full the outstanding Post-Emergence Debt as required by the terms of such indebtedness. In connection with the prepayment, approximately $42.1 million of cash held in a cash collateral account for the benefit of our lenders was released to us.

      Although retirement of the Post-Emergence Debt significantly reduced the Company’s indebtedness, the Qwest transaction resulted in a substantial decrease in revenues and resulting operating income and cash flows to the Company. In the fourth quarter of 2003, the Company embarked on substantial cost cutting efforts in an attempt to mitigate the impact of the loss of revenues from Qwest. These efforts, however, were insufficient to stem significant ongoing operating losses.

Strategic Transaction and Preparations for Bankruptcy

      Beginning in early 2004, in response to the Company’s continuing operating losses the Company undertook an assessment of the Company’s financial condition and prospects. Following this assessment, the Board determined that the Company’s financial condition and prospects were subject to substantial uncertainties and concluded that it was in the best interest of the Company’s stockholders and creditors to seek a strategic transaction in which the highest currently available value for the Company’s business and assets might be realized.

      On February 13, 2004, the Board authorized the Company to retain an investment banker to advise the Company regarding the possibility of such a transaction. On February 16, 2004, the Company formally retained Lehman Brothers to assist the Company in connection with its search of a strategic transaction.

      In February 2004, the Company also retained insolvency counsel Pachulski Stang Ziehl Young Jones & Weintraub, P.C. to provide legal advice and assistance. Based on the advice of its counsel, the Board determined that it was in the best interests of the Company’s creditors and stockholders to pursue a dual strategy under which the Company would (a) prepare for a voluntary Chapter 11 bankruptcy proceeding and (b) continue to seek a strategic transaction for the purpose of maximizing the value of the Company for the benefit of its stockholders and creditors.

      In light of the Company’s significant continuing negative cash flow, the Company determined that it was necessary to improve its cash position in order to facilitate an orderly sale of its assets. Accordingly, on April 1, 2004, the Company entered into an agreement with Level 3 Communications, Inc. (“Level 3”) whereby Level 3 agreed to pay $35 million in cash and other consideration for the right to provide remote access service to certain of the Company’s customers. To date, $30.0 million has been paid and $5.0 million is due to be paid on October 1, 2004, subject to the Company’s performance under a transition services agreement with Level 3.

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      On April 1, 2004, the Company issued a press release announcing the Level 3 transaction and filed with the SEC its 2003 Annual Report on Form 10-K. The closing price of the Company’s common stock on April 1, 2004 was $6.81 per share.

      In May 2004, the compensation committee of the Board considered the impact of a potential transaction on the Company’s ability to retain the services of its senior management and other key employees, including the severance benefits available to these employees. After receiving advice from its legal counsel, the compensation committee authorized the Company to adopt the ICG Key Employee Retention Plan (the “KERP”) based on its belief that this would encourage the continuity of management. The terms of the KERP are described in this Proxy Statement in greater detail under the caption “Interests of Certain Persons in the Merger.”

Strategic Transactions and Discussions with MCCC

      As part of the search for a value-maximizing strategic transaction, Lehman Brothers held discussions with more than 60 potential strategic and financial buyers with respect to a number of alternatives, including a third party capital infusion, a sale of substantially all of the Company to one buyer (with or without protection of the bankruptcy court) and a piecemeal sale of the Company to multiple buyers (with or without protection of the bankruptcy court). From mid-February to July 19, 2004, the Board met a total of 16 times to review the status of the strategic process. Of the nine letters of interest that the Company received in this time, only a few, in the opinion of the Board, contained viable alternatives.

      On or about March 10 and 11, 2004, John T. Siegel, a principal of Columbia Capital and Peter H. O. Claudy, a principal of M/ C Venture Partners, contacted the Company and indicated that each of their respective companies had an interest in reviewing transaction opportunities with the Company and wished to do so together.

      On or about March 15, 2004, Mr. Claudy and Mr. Siegel executed non-disclosure agreements with respect to the information to be reviewed and, shortly thereafter, they received informational binders. Representatives of these firms attended a management presentation at the Company’s headquarters in early April 2004.

      From mid-April to early May, the Company, Columbia Capital and M/ C Venture Partners held a number of discussions regarding continuing due diligence and Columbia Capital and M/ C Venture Partners’ preparations of a proposal for a transaction. On May 11, 2004, Columbia Capital and M/ C Venture Partners submitted a written proposal to the Company’s Board outlining an out-of-court transaction to acquire all of the Company’s capital stock and capital stock equivalents for cash for $0.50 per share. The proposal was subject to expire on May 14, 2004, and included a number of conditions, including satisfactory completion of due diligence by Columbia Capital and M/ C Venture Partners.

      At a meeting on May 13, 2004, the Board reviewed the status of the strategic process, including Columbia Capital and M/ C Venture Partners’ May 11 proposal. In light of the continuing interest of other purchasers for at least parts of the Company’s business, and due to the conditionality of the proposal, the Company declined to pursue the transaction contemplated by the May 11 letter.

      During late May, Columbia Capital and M/ C Venture Partners continued to express a serious interest in pursuing an acquisition of the Company, and on May 20, 2004 delivered a draft exclusivity agreement to the Company. Under the proposed exclusivity agreement, Columbia Capital and M/ C Venture Partners reiterated their intention to work toward an out-of-court merger in which the Company’s stockholders would receive $0.50 per share in cash. For a 60-day period, the Company would be required to refrain from working with any other potential buyers in connection with an out-of-court (i.e., non-bankruptcy) restructuring of its debts and material contracts. At its meeting on May 27, 2004, the Board discussed the proposed exclusivity agreement. After reviewing the status of the Company’s search for prospective purchasers, the Board determined that Columbia Capital and M/ C Venture Partners were the parties that had expressed a serious interest in purchasing the Company in a non-bankruptcy transaction. After discussion, the Board authorized management to negotiate with Columbia Capital and MCCC Ventures regarding the exclusivity agreement.

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      Following further negotiations between the Company and Columbia Capital and M/ C Venture Partners, on June 4, 2004 the Board authorized management to enter into the exclusivity agreement. The Company and Columbia Capital and M/ C Venture Partners executed the exclusivity agreement on the same day.

      Discussion regarding the terms and conditions of a proposed sale or merger of the Company continued in June, and Columbia Capital and M/ C Venture Partners undertook discussions with certain of the Company’s landlords and key institutional stockholders, including Huff and the Cerberus Parties.

      On June 24, 2004, the Company received a draft of the Merger Agreement from Columbia Capital and M/ C Venture Partners. From June 24 to July 17, 2004, the Company and Columbia Capital and M/ C Venture Partners negotiated extensively regarding the terms of the proposed Merger. During these negotiations, the Company received significant concessions from Columbia Capital and M/ C Venture Partners, including the following:

      At its meeting on July 17, 2004, the Board was presented with the terms and conditions of the final Merger Agreement, Interim Credit Agreement (including the related Pledge and Security Agreement), and Interim Management Agreement. The Board acknowledged that the closing price of the Company’s stock on July 16, 2004, was $0.51 per share. After due consideration and deliberation, the Board approved these agreements and authorized and directed the officers of the Company to execute and deliver them on behalf of the Company and to carry out the transactions contemplated therein.

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Signing of Definitive Agreements

      On July 19, 2004, the Company, MCCC and Merger Corp. signed the Merger Agreement. Contemporaneously with the Merger Agreement, the Company, each of its subsidiaries and MCCC signed the Interim Credit Agreement and related security documents and MCCC deposited approximately $6.35 million in the required deposit escrow at JPMorgan Chase and funded a term loan under the Interim Credit Agreement of $2.4 million to the Company. That same day, the Company issued a press release announcing the Merger and filed the release, together with the executed documents, with the SEC on Form 8-K. The closing price of the Company’s common stock on July 19, 2004, was $0.68 per share.

REASONS FOR THE MERGER AND

      The Board reviewed and discussed the Merger and the Merger Agreement with our management and our financial and legal advisors in determining that the Merger is fair to, and in the best interests of, the Company and its stockholders and creditors.

      In reaching its conclusion to approve and adopt the Merger Agreement, the Board considered a number of factors, including the following factors the Board considered to be favorable to the Merger:

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      Our Board also considered the following factors, all of which our Board considered as factors detracting from the attractiveness of the Merger:

      The discussion of the information and factors considered by our Board is not exhaustive, but includes all material factors considered by our Board. In view of the wide variety of factors considered by our Board in connection with its evaluation of the Merger and the complexity of these matters, our Board did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. Our Board evaluated the factors described above, including asking questions of our management and our legal and financial advisors, and reached the unanimous decision that the Merger is in the best interests of the Company, our stockholders and creditors. In considering the factors described above, individual members of our Board may have given different weights to different factors. Our Board considered these factors as a whole, and overall considered them to be favorable to, and to support, its

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      Our Board determined that the Merger, the Merger Agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of the Company and our stockholders and creditors. Accordingly, the Board unanimously recommends that you vote “FOR” the approval and adoption of the Agreement.

OPINION OF FINANCIAL ADVISOR

      In February 2004, we engaged Lehman Brothers to act as our financial advisor in connection with consideration of restructuring, capital raising and other strategic alternatives, including the Merger. On July 17, 2004, Lehman Brothers rendered its oral opinion (subsequently confirmed in writing) to our Board that as of such date and, based upon and subject to certain matters stated therein, from a financial point of view, the consideration to be offered to our stockholders in the Merger was fair to our stockholders.

      The full text of Lehman Brothers’ written opinion, dated July 17, 2004 (the “Lehman Brothers Opinion”) is attached as Appendix B to this proxy statement. Stockholders should read the opinion for a discussion of the assumptions made, procedures followed, factors considered and limitations imposed upon the review undertaken by Lehman Brothers in rendering its opinion. The following is a summary of the Lehman Brothers Opinion and the methodology that Lehman Brothers used to render its fairness opinion.

      Lehman Brothers’ advisory services and opinion were provided for the information and assistance of our Board in connection with its consideration of the Merger. The Lehman Brothers Opinion is not intended to be and does not constitute a recommendation to you as to how you should vote with respect to the Merger or any related matter. Lehman Brothers was not requested to opine as to, and the Lehman Brothers Opinion does not in any manner address, the fairness of the Merger to any creditor of the Company or the Company’s underlying business decision to proceed with or effect the Merger.

      In arriving at its opinion, Lehman Brothers reviewed and analyzed:

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      In addition, Lehman Brothers had discussions with the management of the Company concerning the business, operations, assets, financial condition and prospects of the Company and undertook such other studies, analyses and investigations as Lehman Brothers deemed appropriate.

      In arriving at its opinion, Lehman Brothers assumed and relied upon the accuracy and completeness of the financial and other information provided by the Company’s management or otherwise used by Lehman Brothers without assuming any responsibility for independent verification of such information. Lehman Brothers further relied upon the assurances of management that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the Forecasts, upon advice of the Company, Lehman Brothers assumed that the Forecasts were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company as to the future financial performance of the Company and that the Company would perform substantially in accordance with the Forecasts. In arriving at its opinion, Lehman Brothers did not conduct a physical inspection of the properties and facilities of the Company and did not make or obtain any evaluations or appraisals of the assets or liabilities of the Company. The Lehman Brothers Opinion was necessarily based upon market, economic and other conditions as they existed on, and could be evaluated as of, the date of such opinion.

      In connection with rendering its opinion, Lehman Brothers performed certain financial, comparative and other analyses as described below. In arriving at its opinion, Lehman Brothers did not ascribe a specific range of value to the Company, but rather made its determination as to the fairness, from a financial point of view, to the Company’s stockholders of the consideration to be paid in the Merger on the basis of financial and comparative analyses. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial and comparative analysis and the application of those methods to the particular circumstances, and therefore, such an opinion is not readily susceptible to summary description. Furthermore, in arriving at its opinion, Lehman Brothers did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Lehman Brothers believes that its analyses must be considered as a whole and that considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion. In its analyses, Lehman Brothers made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company. None of the Company, MCCC, Merger Corp., Lehman Brothers or any other person assumes responsibility if future results are materially different from those discussed. Any estimates or projections contained in these analyses were not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth therein. In addition, analyses relating to the value of businesses do not purport to be appraisals or to reflect the prices at which businesses actually may be sold.

Analysis of Alternatives Available to the Company

      In the course of Lehman Brothers’ role as the Company’s strategic and financial advisor, Lehman Brothers held discussions with more than 60 potential strategic and financial buyers with respect to a number of alternatives, including a third party capital infusion, a sale of substantially all of the stock or assets of the Company to one buyer (via bankruptcy and out-of-court) and a piecemeal sale of the assets of the Company to multiple buyers (via bankruptcy and out-of-court). This sale process resulted in the proposed Merger, which was the only offer to purchase the entire company outside of bankruptcy, and eight indications of

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      As part of its analysis, Lehman Brothers reviewed and compared certain actual and projected financial and stock market information for publicly traded companies in the Competitive Local Exchange Carriers sector that Lehman Brothers deemed comparable to the Company. The comparable companies were chosen because they are publicly traded companies with operations that, for purposes of the analysis, may be considered similar to the operations of the Company. In addition, Lehman Brothers also reviewed certain publicly available information regarding the terms and financial characteristics of selected business combination transactions that were announced or took place from July 2002 through March 2004, which Lehman Brothers believed to be comparable to the proposed transaction.

      However, because of the inherent differences between the businesses, operations, financial conditions and prospects of the Company and the comparable companies and because the reasons for and the circumstances surrounding each of the transactions analyzed were specific to each transaction, Lehman Brothers believes that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the analyses and accordingly also made qualitative judgments concerning differences between the financial and operating characteristics and prospects of the Company and the companies included in the analyses that would affect the enterprise values of each. Lehman Brothers informed the Company’s Board that the quantitative results of the analyses were not as meaningful an indicator of fairness as the comparison of the proposed offer to the alternatives for the Company in bankruptcy.

      Lehman Brothers is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. The Company’s Board selected Lehman Brothers because of its expertise, reputation and familiarity with advising financially distressed companies as well as the telecommunications industry generally and because its investment banking professionals have substantial experience in transactions comparable to the Merger.

      As compensation for its strategic and financial advisory services, the Company has paid Lehman Brothers a monthly fee equal to $125,000 (the “Monthly Fee”) since February 16, 2004 and, in connection with the Merger, the Company paid Lehman Brothers an opinion fee equal to $500,000 (the “Opinion Fee”). Additional compensation equal to $3.0 million (or, if the total consideration involved in the transaction is over $100 million, $3.0 million plus 2.5% of every dollar above $100 million, not to exceed $5.0 million), less all paid Monthly Fees and one-half of the Opinion Fee, will be paid to Lehman Brothers by the Company upon completion of the transaction. The Company has agreed to place such amount in escrow for Lehman Brothers upon approval of the transaction by the Company’s stockholders. In addition, the Company has agreed to reimburse Lehman Brothers for reasonable out-of-pocket expenses incurred in connection with the Merger and to indemnify Lehman Brothers for certain liabilities that may arise out of its engagement by the Company and the rendering of the Lehman Brothers Opinion.

      In the ordinary course of its business, Lehman Brothers may actively trade in the debt or equity securities of the Company for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.

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INTERESTS OF CERTAIN PERSONS IN THE MERGER

      When you consider the recommendations of the Board with respect to the Merger, you should be aware that some of our directors and officers have interests in the Merger and participate in arrangements that are different from, or are in addition to, those of our stockholders generally. The Board was aware of those interests and considered them, among other matters, when they approved the Merger Agreement.

ICG Key Employee Retention Plan

      As described under “Strategic Transaction and Preparations for Bankruptcy,” based on the advice of its financial and legal counsel, the Board determined that it was in the best interests of the Company’s creditors and stockholders to pursue a dual strategy, under which, the Company would (i) prepare for a voluntary Chapter 11 bankruptcy proceeding and (ii) continue to seek a strategic transaction for the purpose of maximizing the value of the Company for the benefit of its stockholders and creditors.

      In connection with adoption of this strategy, the compensation committee of the Board considered the impact of a potential transaction on the Company’s ability to retain the services of its senior management and other key employees, including the severance benefits available to these employees. After receiving advice from its legal counsel, the compensation committee authorized the Company to adopt the ICG Key Employee Retention Plan (the “KERP”) based on the committee’s belief that this would encourage the continuity of management.

      Jeffrey Pearl, Michael Kallet, Richard Fish and Bernard Zuroff, are executive officers of the Company who are among the participants in the KERP. Under the KERP, the Company has granted retention awards payable in three installments vesting on specified dates in 2004 or upon a change of control or termination of employment other than for cause. Messrs. Pearl, Kallet, Fish and Zuroff are entitled to retention awards of $600,000, $400,000, $302,000 and $264,000, respectively. The first installment, consisting of 25% of the total amount of each participant’s bonus, was paid on August 3, 2004. The Merger will constitute a “change of control” under the KERP. Accordingly, the Merger may accelerate the Company’s obligation to pay retention awards to the participants in the KERP.

Warrants

      One of the Company’s directors, Timothy F. Price, is a consultant of Cerberus Capital Management, L.P. (“CCM”). Certain affiliates of CCM (collectively, the “Cerberus Parties”) hold, in the aggregate, warrants to purchase 426,316 shares of the Company’s common stock having an exercise price of $0.01 per share. In accordance with the terms of the Merger Agreement, and unless these warrants are exercised before the Record Date, the Cerberus Parties are entitled to receive $315,474 in consideration of the cancellation of such warrants in connection with the Merger.

Indemnification of Our Directors and Executive Officers

      Each person who is or was an officer or director of the Company or any of our subsidiaries at or before the Effective Time will be entitled to indemnity by us against any losses, costs, expenses, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation arising out of the fact that such person is or was a director or officer of us or any of our subsidiaries prior to the Effective Time. Directors and officers will be eligible for coverage under our directors’ and officers’ liability insurance policies for acts and omissions occurring before the Effective Time.

Release of Claims

      The Company is a party to the Support Agreement dated July 19, 2004 (the “Support Agreement”) with MCCC, Merger Corp., Huff, and the Cerberus Parties. Pursuant to the Support Agreement, Huff and the Cerberus Parties and their directors, officers and certain other related parties will be released by MCCC, the Merger Corp. and us from any and all claims as of the Effective Time. Three of our directors (William J.

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THE MERGER AGREEMENT

      The following discussion of the Merger Agreement is only a summary of the material provisions of the Merger Agreement and is qualified by reference to the copy of the Merger Agreement attached hereto as Appendix A. Stockholders are urged to read the Merger Agreement carefully.

Structure and Effective Time

      The Merger Agreement provides that Merger Corp., a wholly owned subsidiary of MCCC, will merge with and into the Company, with the Company being the surviving corporation. As a result of the Merger, the Company will be a wholly owned subsidiary of MCCC.

      The Merger will become effective when the certificate of Merger is filed with the Secretary of State of the State of Delaware, or at such later time as we and MCCC may specify in the certificate of merger.

Merger Consideration

      At the Effective Time, each outstanding share of the Company’s common stock will be converted into the right to receive $0.75 in cash, without interest.

Treatment of Stock Options and Warrants

      As of the Effective Time, each outstanding option and warrant of the Company will be cancelled, and each option and warrant holder will be entitled to receive a cash payment (less applicable withholding taxes and without interest), equal to the excess, if any, of $0.75 over the applicable exercise price per share of the stock option or warrant, multiplied by the number of shares of our common stock that would have been received if such stock option or warrant was exercised immediately prior to the Effective Time.

Deposit Escrow

      Contemporaneously with the execution of the Merger Agreement, MCCC has deposited an amount equal to the merger consideration (“Deposit”) with JPMorgan Chase, as third party escrow holder (the “Escrow Holder”), who will hold the funds in a segregated account designated for the Deposit pursuant to an escrow agreement. The Deposit will be held by the Escrow Holder until the earlier of the closing of the Merger or the effective date of the termination of the Merger Agreement. At the closing of the Merger, the Deposit will be disbursed to the paying agent for distribution to holders of the Company’s outstanding common stock, options and warrants in accordance with the terms of the Merger, and any accrued interest on the Deposit will be disbursed to MCCC. Except in connection with the termination of the Merger Agreement under certain circumstances in which MCCC forfeits the Deposit, the Deposit will be returned to MCCC upon termination of the Merger Agreement.

Representations and Warranties

      In the Merger Agreement, the Company makes certain representations and warranties, subject to exceptions that were disclosed to MCCC, concerning the Company’s business and assets. These representations and warranties relate to, among other things, the following subject matters:

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      The Merger Agreement also contains representations and warranties of MCCC and Merger Corp. relating to, among other things:

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      The representations and warranties included in the Merger Agreement are complex and not easily summarized. You are urged to read carefully Articles 3 and 4 of the Merger Agreement attached to this proxy statement as Appendix A.

Conduct of Our Business Prior to Merger

      Under the Merger Agreement, the Company and its subsidiaries have agreed, until the Effective Time, to conduct our operations in the ordinary course of business consistent with past practice, and to use our reasonable efforts to preserve intact our business organization.

      In addition, the Company and its subsidiaries have agreed, unless otherwise recommended by the manager under the Interim Management Agreement (as more fully described in “The Interim Management Agreement”) or approved by MCCC, to various other restrictions on our business and operations, including, but not limited to, restrictions on our ability to:

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No Solicitation of Proposals

      We have agreed not to, nor permit our subsidiaries to, (i) solicit, initiate or encourage any inquiries or the making of any proposal which constitutes a Company Takeover Proposal (as described below), (ii) participate in any discussions or negotiations regarding any Company Takeover Proposal, or (iii) enter into any agreement or arrangement requiring us to abandon, terminate or fail to consummate the Merger or other transactions contemplated by the Merger Agreement or any related agreements unless the Board determines in good faith, after consultation with a nationally reputable financial advisor and its outside legal advisors, that such an arrangement could reasonably be expected to result in a Company Superior Proposal (as described below).

      In addition, the Board will not (i) withdraw or modify, in a manner adverse to MCCC, the approval or recommendation by the Board of the Merger Agreement or the Merger, except under certain circumstances, (ii) approve or recommend any other Company Takeover Proposal or (iii) cause us to enter into any letter of intent, acquisition agreement or other similar agreement related to any Company Takeover Proposal. Our Board may terminate the Merger Agreement in response to a Company Superior Proposal which was not solicited by the Company and which did not result from a breach of any non-solicitation provision of the Merger Agreement.

      A “Company Takeover Proposal” means any inquiry, proposal or offer from any person relating to any (w) direct or indirect acquisition or purchase of a business that constitutes 20% or more of the net revenues, net income or the assets of the Company and its subsidiaries, taken as a whole, (x) direct or indirect acquisition or purchase of 20% or more of any class of equity securities of the Company or any of its

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      A “Company Superior Proposal” means any proposal made by a third party to acquire, directly or indirectly, including pursuant to a tender offer, exchange offer, merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction, for consideration consisting of cash and/or securities, more than 50% of the combined voting power of the shares of our common stock then outstanding or all or substantially all the assets of the Company and its subsidiaries taken together and otherwise on terms which our Board determines in good faith, upon consideration of the value of consideration, likelihood of consummation of such proposed transaction and other factors, in each case, to be more favorable to our stockholders than the Merger.

Indemnification

      The Company, as the surviving corporation, will indemnify each person who is or was an officer, director or employee of the Company or any of the Company’s subsidiaries before the Effective Time against any losses, costs, expenses, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation arising out of the fact that such person is or was a director, officer or employee of us or any of our subsidiaries prior to the Effective Time.

      For two years after the Effective Time, the surviving corporation will provide directors’ and officers’ liability insurance for acts and omissions occurring before the Effective Time. However, the annual premium for such directors’ and officers’ liability insurance shall not exceed 110% of the annual premium for such insurance in effect on the date of the Merger Agreement.

Other Covenants

      Additional covenants by the Company include, without limitation: (i) preparation and filing a proxy statement with respect to the Merger; (ii) delivering to MCCC annual and quarterly reports filed with the SEC, monthly unaudited balance sheets and related statements of earnings and cash flow, materials filed with the SEC, and a rolling thirteen-week weekly forecasts of cash receipts and disbursements of the Company and its subsidiaries and a report of cash receipts and disbursements showing actual performance; (iii) maintaining insurance with respect to the Company’s properties and businesses against casualties and contingencies; (iv) maintaining the validity of communication licenses (i.e., licenses issued by the FCC or other governmental entity); (v) prompt filing of the necessary application(s) with the FCC or State PUCs seeking the consent of such entities to the transfer of the permits issued by the FCC or State PUCs to the Company and its subsidiaries; (vi) cooperating with MCCC (at MCCC’s expense) in obtaining lease amendments or consents to the consummation of the transactions contemplated by the Merger Agreement and any related agreements; (vii) giving notice to MCCC of any material violation of any environmental law that the Company or any of its subsidiaries reports in writing to any federal, state or local environmental agency that has the potential to materially adversely affect its assets or financial condition; and (viii) giving notice to MCCC of any litigation or proceedings threatened in writing or any pending litigation and proceedings affecting the Company or any of its subsidiaries.

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Conditions to Merger

      The obligations of the Company and MCCC to complete the Merger are subject to the satisfaction of the following conditions:

      The Company’s obligation to complete the Merger is subject to the satisfaction of the following additional conditions:

      The obligations of MCCC to complete the Merger are subject to the satisfaction of the following additional conditions:

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Termination of Merger Agreement

      We and MCCC may mutually agree to terminate the Merger Agreement at any time without completing the Merger, even after we receive stockholder approval.

      In addition, either the Company or MCCC may terminate the Merger Agreement and abandon the Merger if:

      In addition, MCCC may terminate the Merger Agreement if:

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Termination Fee; Expenses

      We must reimburse MCCC and Merger Corp. for all out-of-pocket expenses and fees up to a maximum of $1 million if the Merger Agreement is terminated because:

      In addition, we must pay MCCC a termination fee of $5 million if there is a public announcement of a Company Takeover Proposal prior to or within 180 days after the termination of the Merger Agreement (other than termination by the Company because MCCC breaches its representations or warranties or fails to perform in any material respect any covenants contained in the Merger Agreement or related agreements), or the Merger Agreement is terminated (i) by MCCC or the Company upon the Company’s execution of an acquisition agreement with a third party related to a Company Takeover Proposal or the Company institutes a bankruptcy proceeding whereby all or substantially all of the assets of the Company and its subsidiaries are sold, or (ii) by MCCC if the Company breaches the non-solicitation provisions of the Merger Agreement, the Board withdraws or modifies its recommendation of the Merger or the Company or the Board approves an acquisition agreement with a third party related to a Company Takeover Proposal.

Surrender of Stock Certificates

      Prior to the Effective Time, MCCC will appoint a paying agent for the purpose of receiving certificates and other documents and instruments (the “Certificates”) that immediately prior to the Effective Time represented shares of the Company’s common stock, options or warrants. Promptly after the Effective Time,

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      When you deliver your stock certificates or other documents to the paying agent along with a properly executed letter of transmittal and any other required documents, subject to any required withholding of taxes, you will receive the consideration to which you are entitled under the Merger Agreement with respect to the common stock, options or warrants represented by your Certificate, and the Certificate will be cancelled. No interest will be paid or accrued on the merger consideration upon the surrender of any certificate for the benefit of the holder of the Certificate.

Stockholder Appraisal Rights

      Under Section 262 of the Delaware General Corporation Law (“DGCL”), any holder of our common stock who does not wish to accept the $0.75 per share merger consideration may dissent from the Merger and elect to exercise appraisal rights. A stockholder who exercises appraisal rights may ask the Delaware Court of Chancery to determine the fair value of his or her shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and may ask to receive payment of fair value in cash, together with a fair rate of interest, if any, provided that the stockholder complies with the provisions of Section 262 of the DGCL.

      The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL, and is qualified in its entirety by the full text of Section 262 of the DGCL, which we attach to this proxy statement as Appendix C. All references in Section 262 of the DGCL to a “stockholder” and in this summary to a “stockholder” are to the record holder of the shares of our common stock who asserts appraisal rights.

      Under Section 262 of the DGCL, when a merger is submitted for approval at a meeting of stockholders, as in the case of the Merger Agreement, the corporation, not less than 20 days prior to the meeting, must notify each of its stockholders entitled to appraisal rights that appraisal rights are available and include in the notice a copy of Section 262 of the DGCL. This proxy statement constitutes your notice, and we attach the applicable statutory provisions to this proxy statement as Appendix C. Any holder of our common stock who wishes to exercise appraisal rights or who wishes to preserve the right to do so, should review the following discussion and Appendix C carefully. Failure to comply with the procedures of Section 262 of the DGCL in a timely and proper manner will result in the loss of appraisal rights.

      Stockholders wishing to exercise the right to dissent from the Merger and seek an appraisal of their shares must do ALL of the following:

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      Neither voting (in person or by proxy) against, abstaining from voting on or failing to vote on the proposal to adopt the Merger Agreement will constitute a written demand for appraisal within the meaning of Section 262 of the DGCL. The written demand for appraisal must be in addition to and separate from any proxy or vote. In addition, failure by a stockholder to vote against the Merger Agreement will not constitute a waiver of the stockholder’s appraisal rights.

      Only a holder of record of shares of our common stock, issued and outstanding immediately prior to the Effective Time may assert appraisal rights for the shares of stock registered in that holder’s name. A demand for appraisal must be executed by or on behalf of the stockholder of record, fully and correctly, as the stockholder’s name appears on the stock certificates. The demand must specify the stockholder’s name and mailing address, the number of shares of common stock owned and that the stockholder intends to demand appraisal of his or her common stock. Stockholders who hold their shares in brokerage accounts or other nominee forms, and who wish to exercise appraisal rights, should consult with their brokers to determine the appropriate procedures for the nominee holder to make a demand for appraisal of those shares. A person having a beneficial interest in shares held of record in the name of another person, such as a broker or nominee, must act promptly to cause the record holder to follow properly and in a timely manner the steps necessary to perfect appraisal rights.

      If you elect to exercise appraisal rights under Section 262 of the DGCL you should mail or deliver a written demand to: ICG Communications, Inc., 161 Inverness Drive, West Englewood, Colorado 80112, ATTN: Corporate Secretary.

      If we complete the Merger, we will give written notice of the Effective Time within 10 days of the Merger’s completion to each of our former stockholders who did not vote in favor of the Merger Agreement and who made a written demand for appraisal in accordance with Section 262 of the DGCL. Within 120 days after the Effective Time, but not later, either the surviving corporation or any dissenting stockholder who has complied with the requirements of Section 262 of the DGCL may file a petition in the Delaware Court of Chancery demanding a determination of the value of the shares of our common stock held by all dissenting stockholders. Stockholders who desire to have their shares appraised should initiate any petitions necessary for the perfection of their appraisal rights within the time periods and in the manner prescribed in Section 262 of the DGCL.

      Within 120 days after the Effective Time, any stockholder who has complied with the provisions of Section 262 of the DGCL to that point in time may receive from the surviving corporation, upon written request, a statement setting forth the aggregate number of shares not voted in favor of the Merger Agreement and with respect to which we have received demands for appraisal, and the aggregate number of holders of those shares. The surviving corporation must mail this statement to the stockholder within 10 days of receipt of the request or within 10 days after expiration of the period for delivery of demands for appraisals under Section 262 of the DGCL, whichever is later.

      If any party files a petition for appraisal in a timely manner, the Delaware Court of Chancery will determine which stockholders are entitled to appraisal rights and may require the stockholders demanding appraisal who hold certificated shares to submit their stock certificates to the court for notation of the pendency of the appraisal proceedings. If the stockholder fails to comply with the court’s direction, the court may dismiss the proceeding against the stockholder. The Delaware Court of Chancery will thereafter determine the fair value of the shares of our common stock held by dissenting stockholders, exclusive of any element of value arising from the accomplishment or expectation of the Merger, but together with a fair rate of interest, if any, to be paid on the amount determined to be fair value.

      In determining the fair value, the Delaware Court of Chancery will take into account all relevant factors. The Delaware Court of Chancery may determine the fair value to be more than, less than or equal to the consideration that the dissenting stockholder would otherwise receive under the Merger Agreement. If no party files a petition for appraisal in a timely manner, then stockholders will lose the right to an appraisal.

      The Delaware Court of Chancery will determine the costs of the appraisal proceeding and will allocate those costs to the parties as the Delaware Court of Chancery determines to be equitable under the

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      Any stockholder who has duly demanded an appraisal in compliance with Section 262 of the DGCL may not, after the Effective Time, vote the shares subject to the demand for any purpose or receive any dividends or other distributions on those shares (except dividends or other distributions payable to holders of record of shares as of a record date prior to the Effective Time).

      Any stockholder may withdraw a demand for appraisal and accept the merger consideration by delivering to the surviving corporation a written withdrawal of the demand for appraisal, except that (1) any attempt to withdraw made more than 60 days after the Effective Time will require written approval of the surviving corporation and (2) no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, and may be subject to such conditions as the Delaware Court of Chancery deems just. If the stockholder fails to perfect, successfully withdraws or loses the appraisal right, the stockholder’s shares will be converted into the right to receive the merger consideration.

INTERIM CREDIT AGREEMENT

      The following discussion of the Interim Credit Agreement is only a summary of the material provisions of the Interim Credit Agreement and is qualified by reference to the copy of the Interim Credit Agreement attached hereto as Appendix D. Stockholders are urged to read the Interim Credit Agreement carefully.

Generally

      On July 19, 2004, in order to fund its obligations pending the consummation of the Merger, the Company entered into the Interim Credit Agreement with MCCC as the lender and the Company’s subsidiaries as guarantors. This “bridge” financing consists of (i) a term loan in an aggregate principal amount of $2.4 million, which was made on July 19, 2004, to cover certain costs associated with planned restructuring activities and (ii) a revolving credit facility of approximately $15.7 million to cover (i) certain costs associated with additional restructuring activities, available immediately, and (ii) certain budget or cash shortfalls of the Company, available if stockholder approval of the Merger is received. All obligations under the Interim Credit Agreement and certain obligations under the Merger Agreement are secured by first priority security interests in all of the assets of the Company and its subsidiaries (subject to certain limited, existing liens and, where required, state regulatory approvals). To further secure the Company’s obligations under the Interim Credit Agreement, the Company and the guarantors have pledged to MCCC the capital stock in each of the Company’s subsidiaries. All borrowings under the Interim Credit Agreement accrue interest at an annual rate of 6%, compounded quarterly; provided, however, in the case of an “Event of Default” (as defined in the Interim Credit Agreement), interest on the Company’s borrowings will accrue at a default rate of either 8% or 11% (depending on the type of default at issue).

Repayment

      The Company must repay all of its borrowings in full (including all accrued, unpaid interest and any unpaid related expenses of MCCC) under the Interim Credit Agreement on the earliest to occur of the following: (i) the date that is 180 days after the effective date of the Merger Agreement; (ii) the date on which the Merger Agreement is terminated for any reason; (iii) November 30, 2004 in the event that stockholder approval has not been obtained by October 31, 2004; (iv) June 30, 2005 and (v) the acceleration

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Representations, Conditions, and Events of Default

      Pursuant to the Interim Credit Agreement, the Company has made certain representations to, entered into certain covenants with, or agreed to certain conditions with MCCC, including, but not limited to, the following: (i) the proceeds of the term loan and a certain part of the revolving financing facility may only be used to satisfy obligations in connection with certain of the Company’s restructuring activities and the proceeds of a certain part of the interim financing facility may only be used to pay expenses and for purposes consistent with an approved budget; (ii) in order for the Company to obtain borrowings under the term loan and the revolving credit facility, the Merger Agreement and Management Agreement must not have been terminated by any party thereto or breached by the Company; (iii) in order for the Company to continue to receive financing, prior to the effective date of the Company’s stockholder approval, there must not have occurred any event or change that resulted in or is reasonably expected to result in a “material adverse effect” on the assets, business or condition of the Company or its ability to consummate the transactions contemplated by the Merger Agreement and related agreements; and (iv) to continue to receive financing, there must not be any “Default” or “Event of Default” on the borrowing date.

      Further, upon an “Event of Default”, MCCC can, subject to any applicable regulatory requirements, declare all outstanding borrowings and accrued and other specified obligations immediately due and payable, foreclose on any or all of the assets of the Company and its subsidiaries and/or exercise any other remedies available under the Interim Credit Agreement or applicable law. “Events of Default” under the Interim Credit Agreement include, without limitation, the following: (i) prior to the effective date of the Company’s stockholder approval, any of the representations or warranties made by the Company or its subsidiary guarantors in or in connection with the Interim Credit Agreement or any related loan document prove to be false or misleading; (ii) the Company defaults with respect to any payment of principal when due under the Interim Credit Agreement; (iii) the Company defaults with respect to any payment of expenses, interest and other amounts payable under the Interim Credit Agreement and such default continues unremedied for more than two business days; (iv) the termination of the Merger Agreement by any party thereto except in cases following a breach by MCCC; (v) the Merger Agreement ceases, for any reason, to be a valid, binding and enforceable obligation of the Company; (vi) the Company and/or subsidiary guarantors fail to perform or observe any of the covenants and conditions in the Interim Credit Agreement and related loan documents and such failure (if not willful) remains uncured for 30 days; (vii) a Change of Control (as defined in the Interim Credit Agreement) occurs; and (viii) the Company or any of its subsidiaries files for bankruptcy.

INTERIM MANAGEMENT AGREEMENT

      The following discussion of the Interim Management Agreement is only a summary of the material provisions of the Interim Management Agreement and is qualified by reference to the copy of the Interim Management Agreement attached hereto as Appendix E. Stockholders are urged to read the Interim Management Agreement carefully.

      If the Company’s stockholders approve the Merger, the Company, certain of the Company’s subsidiaries and MCCC plan to enter into the Interim Management Agreement immediately following stockholder approval of the Merger. Pursuant to the Interim Management Agreement, MCCC will be responsible for the day-to-day management of the business operations of the Company and its subsidiaries, subject to the supervision of the boards of directors of the Company and its subsidiaries, until the Merger is consummated.

      Specifically, the Interim Management Agreement will be signed and become effective upon stockholder approval of the Merger and MCCC’s rights and duties as the “manager” will continue until the consummation of the Merger (or if applicable, the earliest of (i) the termination of the Merger Agreement, (ii) the commencement of a Chapter 11 bankruptcy case by any of the subsidiary signatories to the Interim Management Agreement, (iii) the failure of MCCC to timely fund any proper borrowing request by the Company under the Interim Credit Agreement, and (iv) the termination of the Interim Management

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      MCCC will not receive any separate compensation for its services as manager pursuant to the Interim Management Agreement, other than reimbursement by the Company for MCCC’s reasonable out-of-pocket expenses (in the event that the Merger is not consummated, MCCC will waive its right to reimbursement of expenses).

OTHER MATTERS TO BE TRANSACTED AT THE MEETING

      Other than as described in this proxy statement, no business is scheduled to be transacted at the Meeting.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

      The following discussion summarizes certain material U.S. federal income tax considerations of the Merger generally relevant to holders of our capital stock, assuming that the Merger is completed as contemplated by this proxy statement. This discussion is based upon interpretations of the Internal Revenue Code of 1986, as amended, or the Code, Treasury regulations promulgated under the Code and judicial decisions and administrative rulings as of the date of this proxy statement, all of which are subject to change or differing interpretations, including changes and interpretations with retroactive effect. The discussion below does not address all U.S. federal income tax consequences or any state, local or foreign tax consequences of the Merger. The tax treatment of our stockholders may vary depending upon each stockholder’s particular situation. Also, stockholders subject to special treatment, including:

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      A U.S. stockholder is a stockholder that, for U.S. federal income tax purposes, is:

      A non-U.S. stockholder is any stockholder that is not a U.S. stockholder.

      This discussion of certain material U.S. federal income tax considerations is for general information only and is not tax advice. You are urged to consult your own tax advisor with respect to the particular U.S. federal income tax consequences to you of the Merger, including any special considerations related to your particular situation, as well as the applicability and effect of any state, local, foreign or other tax laws and changes in any applicable tax laws.

Consequences to U.S. Stockholders

      For U.S. stockholders, the Merger will be treated as a taxable sale of our capital stock in exchange for the merger consideration. As a result, each U.S. stockholder will recognize capital gain or loss with respect to our capital stock, measured by the difference between the U.S. stockholder’s tax basis in our capital stock exchanged and the amount of cash received in the Merger. A U.S. stockholder’s adjusted tax basis in our capital stock will generally equal the amount the U.S. stockholder paid for the stock, less any returns of capital that the U.S. stockholder has received with regard to the stock. In the case of a U.S. stockholder that holds lots of our capital stock acquired on different dates or at different prices, gain or loss must be calculated and accounted for separately for each block.

      The gain or loss on the sale of our common stock will constitute long-term capital gain or loss if the capital stock sold has been held for more than one year as of the Effective Time. If a U.S. stockholder receiving long-term capital gain is an individual, then the capital gain will generally be subject to tax at a maximum rate of 15%. The deductibility of capital losses is limited. In addition, U.S. stockholders may be subject to applicable alternative minimum tax. U.S. Stockholders are urged to consult their own tax advisors regarding the tax consequences of the Merger to them.

Consequences to Non-U.S. Stockholders

      Generally, a non-U.S. stockholder’s gain or loss from the Merger will be determined in the same manner as that of a U.S. stockholder. As discussed above, the Merger will be treated as a taxable sale of our capital stock by stockholders in exchange for the merger consideration. For U.S. federal income tax purposes, a non-U.S. stockholder generally is not subject to U.S. federal income taxation on capital gain or loss on that sale, unless:

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      If a non-U.S. stockholder’s capital stock is treated as effectively connected with the non-U.S. stockholder’s conduct of a U.S. trade or business, the non-U.S. stockholder generally will be subject to U.S. federal income tax at regular capital gains rates with respect to that gain, similar to U.S. stockholders. In addition, the non-U.S. stockholder may be subject to applicable alternative minimum tax, a special alternative minimum tax in the case of a nonresident alien individual, or the 30% branch profits tax in the case of a corporate non-U.S. stockholder. If the non-U.S. stockholder is an individual who has been present in the U.S. for 183 days or more during the taxable year of the sale and certain other conditions are satisfied, such stockholder will be subject to a 30% tax on capital gains.

      The transferee of stock in a corporation that is a “U.S. real property holding corporation” as defined in Section 897 of the Code is required to deduct and withhold a tax equal to 10% of the amount realized in the transfer. We do not expect that we will be considered a U.S. real property holding corporation. Therefore, no withholding should be required under Code section 1445.

Backup Withholding

      In general, we must report certain information to the IRS with respect to the payment of cash in connection with the Merger. The payor (which may be us or an intermediate payor) will be required to withhold backup withholding tax at a rate of 28%, unless the stockholder (i) furnishes a correct taxpayer identification number and certifies on the substitute IRS Form W-9 included in the Letter of Transmittal to be provided by the Paying Agent that it is not subject to backup withholding tax, (ii) provides a certification of foreign status on IRS Form W-8 BEN or successor form, or (iii) otherwise is exempt from backup withholding tax. If you do not provide a correct taxpayer identification number, you may be subject to penalties imposed by the IRS. Any amounts paid as backup withholding tax do not constitute an additional tax and will be creditable against your U.S. federal income tax liability provided that the required information is given to the IRS. If backup withholding tax results in an overpayment of tax, then you can obtain a refund by filing a U.S. federal income tax return.

REGULATORY AND OTHER APPROVALS

      Certain of the Company’s subsidiaries provide telecommunications services that are regulated by the Federal Communications Commission and/or state public utility commissions. As providers of such services, those subsidiaries hold a number of authorizations issued by those commissions. Permission from some of those commissions is required to transfer control over those authorizations, customers purchasing regulated services and the stock of the subsidiaries that provide regulated services. Permission from some of those commissions is also required to encumber the regulated assets of those subsidiaries of the Company that provide or are authorized to provide regulated services.

      In addition, to the extent the subsidiaries of the Company that hold state licenses enter into obligations under the Interim Credit Agreement, certain state commissions must approve those financing arrangements. The regulatory consents and approvals described above may delay or jeopardize completion of the Merger as described more fully in “Regulatory and Other Approvals.”

      Under the Communications Act of 1934, as amended, prior Federal Communications Commission approval is required for the transfer of control to MCCC of the Company and those subsidiaries of the Company that hold FCC licenses and authorizations. The FCC must determine whether MCCC is qualified to control such licenses and authorizations and whether the transfer is consistent with the public interest, convenience and necessity. MCCC and the Company filed a transfer of control application with the FCC in July 2004.

      Because certain subsidiaries of the Company also hold licenses and authorizations issued by state public utility commissions, the transfer of control is also subject to certain state regulatory approvals. In addition, to the extent that the subsidiaries of the Company that hold state licenses and authorizations enter into

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT

      The following table sets forth, as of July 19, 2004, the number of shares of our common stock beneficially owned by (i) each of our directors and executive officers, (ii) all of our directors and executive officers as a group, and (c) each person known by us to beneficially own more than 5% of our common stock. Our knowledge is based upon (i) filings made by such persons with the Securities and Exchange Commission in respect of the ownership of our common stock and (ii) the Support Agreement.

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STOCKHOLDER PROPOSALS

      At the Effective Time, all shares of common stock outstanding immediately before the Effective Time will be cancelled and the Company will issue new shares to MCCC, which will become the sole stockholder of the Company. Accordingly, if the Merger takes place, you will cease to be the holder of any shares of our stock and will not receive notice of future annual meetings of stockholders.

      If the Merger is not consummated pursuant to the Merger Agreement, the Company expects promptly to commence federal bankruptcy proceedings for the purpose of liquidating its remaining assets. In such event, we consider it unlikely that stockholders of the Company will recover anything of value in respect of their stock or that any additional annual or special meetings of the stockholders would be necessary or appropriate to the Chapter 11 proceedings or in the best interests of the holders of claims against and interests in the Chapter 11 estate. Accordingly, upon the commencement of Chapter 11 proceedings the Company does not intend to hold any further meetings of the stockholders of the Company. However, under applicable Delaware law and subject to any required Bankruptcy Court approval, a stockholder may have the right to require that such a meeting be held.

      In the event that an annual meeting of our stockholders is held in 2005, any stockholder proposal to be considered for presentation at such meeting must be received by the Company at its principal executives offices located at 161 Inverness Drive West, Englewood, Colorado 80112 a reasonable time before we print and mail our proxy materials for inclusion in the Company’s proxy statement and form of proxy. Furthermore, under Rule 14a-4(c)(1) under the Securities Exchange Act of 1934, as amended, the Company must receive stockholder proposals intended to be presented at the 2005 annual meeting without inclusion in the Company’s proxy statement at a reasonable time before the mailing of the Company’s proxy materials.

WHERE YOU CAN FIND MORE INFORMATION

      We are subject to the information filing requirements of the Securities Exchange Act of 1934, as amended, and, in accordance with the Exchange Act, are obligated to file with the Securities and Exchange Commission periodic reports, proxy statements and other information relating to our business, financial condition and other matters. These reports, proxy statements and other information may be inspected at the SEC’s office at the public reference facilities of the SEC, which are located at Room 1024, Judiciary Plaza, at 450 Fifth Street, NW, Washington, D.C. 20549, and are also available for inspection at the regional offices of

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      You should rely only on the information contained in this document to vote your shares of our common stock at the Meeting. We have not authorized anyone to provide you with information that is different from what is contained in this document. This document is dated                     , 2004.

      You should not assume that the information contained in this document is accurate as of any date other than that date, and the mailing of this document to stockholders does not create any implication to the contrary. This proxy statement does not constitute a solicitation of a proxy in any jurisdiction where, or to or from any person to whom, it is unlawful to make such proxy solicitation in such jurisdiction.

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AGREEMENT AND PLAN OF MERGER

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A-i

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