Viatel's Proposed $60m Funding – 9th February 2004

LONDON, 09 February 2004 - Viatel Holding (Bermuda) Limited (OTC:VTLAF), (the "Company" or "Viatel") today announced proposed $60m funding

Re-launch gathers pace as new brand, advertising campaign and services are rolled out.

Viatel, the pan-European communications company, has signed a term sheet with four investors including Morgan Stanley to raise up to $60m. Although the term sheet is non-binding, negotiations are now underway with Morgan Stanley and Co. Incorporated, Ahab Capital Management, Inc., CFSC Wayland Advisers, Inc. and Varde Partners, Inc. to finalise the details of the proposed financing. It is anticipated that the transaction will be finalised in the second quarter of 2004.

The investment would take the form of senior secured convertible debt securities with 8% interest, payable in cash or in kind, and maturing in 2014. The conversion price is proposed to be contingent on the value of Viatel upon the occurrence of various specified liquidity events.

This announcement represents a significant step forward in the rebuilding of Viatel. Once closed, the deal will leave the company fully funded to deliver on its business plan. Viatel, a provider of communication services and operator of a pan-European network, is reengineering itself to serve mid sized firms in Europe*, a market estimated to grow by 21% to 23.5 billion Pounds Sterling by June 2005**. Viatel will continue to serve carriers and internet service providers with wholesale services.

Lucy Woods, CEO of Viatel and a leading figure in the European telecoms industry said, "The term sheet signed today is a substantial vote of confidence in our business plan, our people and the opportunity we have before us."

"It will strengthen our ability to deliver a fresh approach to European businesses, providing them with the responsive data and internet services they deserve."

Michael Petrick, Managing Director at Morgan Stanley said, "This financing demonstrates our faith in Viatel and its management team and enables the company to pursue the significant opportunities that exist in the European Telecom market."

The announcement coincides with the launch of Viatel's new brand, and a marketing campaign designed to demonstrate Viatel's resolve to serve the untapped potential of the European mid sized business market. This campaign is deliberately fresh and bold, with a sense of humour that articulates Viatel's difference in the overcrowded and under served European business marketplace.

Leslie Goodman, Chairman of Viatel said, "We have worked very hard over the past year to restructure Viatel to meet the changed needs of today's market; this announcement is a demonstration of the progress we've made."

Viatel operates across six European markets, including the UK, France and Germany. It has more than 10,000 business customers, serving them with a full suite of communications services including broadband, Virtual Private Networks, Managed Firewall, Managed Hosting and Co-location.

* Companies between 100 and 1,000 employees ** Analysys - European Fixed Telecoms - June 2003

 

About Viatel

Viatel is a pan-European data and internet services company delivering services in communications to European businesses, regardless of size.

Operating across the UK, France, Germany, Belgium, The Netherlands and Switzerland, Viatel is a communications service provider operating a pan-European network. Headed by Lucy Woods, formerly of WorldCom EMEA and BT, the company employs 180 people throughout Western Europe to provide services including IP-VPNs, managed hosting and managed connectivity.

For further information on Viatel, please visit www.viatel.com

For further information please call:

Chris Jones, Neil Daugherty and James Ralph on +44 (0)207 7340 0430

Forward Looking Statements This document contains "forward-looking statements" as the term is defined in Section 21E of the Securities Exchange Act of 1934, as amended, including statements concerning plans and objectives for future operations, events or performance and underlying assumptions and other statements which are other than statements of historical fact. Any such forward-looking statements are not guarantees of future performance. Various known or unknown factors could in the future cause actual outcomes to differ materially from those anticipated in any such forward-looking statements. Such factors include, among other things, our ability to conclude final terms as to any financing, our ability to maintain a viable cash and balance sheet position, our ability to maintain, operate and develop our network, and other unforeseen financial, legal, operational or technical issues. Any such forward-looking statements speak only as of the date they are made. We undertake no obligation to update any such forward-looking statement in light of new information or future events.

No assurances can be given that this or any other financing transaction will be consummated.

A full copy of the Term Sheet has been filed on Form 6-K with the United States Securities and Exchange Commission.

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