January 22, 2002 -- McLeodUSA Incorporated (Nasdaq:MCLD), one of the nation's largest independent competitive local exchange carriers, announced that in connection with its previously announced recapitalization transaction, it has completed the competitive bidding process for the McLeodUSA Publishing Company led by Credit Suisse First Boston; and has reached a definitive agreement with United Kingdom based Yell Group, a company whose principal shareholders are funds advised by Apax Partners and Hicks, Muse, Tate & Furst, for $600 million.

Concurrently the company has terminated its agreement with Forstmann Little & Co. to purchase McLeodUSA Publishing Company, which was announced on December 3, 2001. Forstmann Little & Co. had agreed to purchase the directory publishing business for $535 million as part of the recapitalization transaction and had agreed that McLeodUSA could seek superior competitive offers with no break-up fee.

The sale of the directory business to the Yell Group is conditioned on the consummation of the company's recapitalization transaction and is also subject to Hart Scott Rodino approval and other customary closing conditions. In addition, the sale and purchase price of $600 million is contingent on a closing date on or before August 1, 2002, with a reduction in price of $200,000 a day from May 1 through August 1, 2002.

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