I 555 Eleventh Street, N.W., Suite 1000 Washington, D.C

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1 :,? 555 Eleventh Street, N.W., Suite 1000 Washington, D.C d Tel: Fax: , FRM AFFLATE OFFCES BY FEDERAL EXPRESS Barcelona New Jersey Brussels New York Chicago Northern Virginia Frankfurt Orange County Hamburg Paris Hong Kong San Diego, * London San Francisco January 15,2008 Ms. Sandra Squire Executive Secretary Public Service Commission of West Virginia 201 Brooks Street Charleston, WV Re: Joint Petition of Matrix Telecom, nc., Americatel Corporation, and Startec Global Operating Company for Approval of Certain Financing Arrangements Dear Ms. Squire: Enclosed herein for filing on behalf of Matrix Telecom, nc., Americatel Corporation and Startec Global Operating Company (together, the "Petitioners"), please find the original and twelve ( 12) copies of a Joint Petition seeking the Commission's expedited approval to participate in certain debt financing arrangements, as set forth in the Petition. Petitioners are requesting the Commission 3 expedited consideration of this filing and that approval be granted by January 31,2008. Please date-stamp and return to us in the enclosed envelope the copy provided for that purpose. Should you have any questions regarding this filing, please do no hesitate to contact me at (619) t Very truly yours, 1 MATRX TELECOM, NC. AMERCATEL,CORPORATON STARTEC GLOBAL OPERATNG COMPANY By Their Counsel: Attachment Noel P. Brock, WV Bar No DC\

2 BEFORE THE PUBLC SERVCE COMMSSON OF WEST VRGNA n the Matter of the Joint Petition ) of ) Matrix Telecom, nc., Americatel CorDoration, 1 and Startec Global Operating Company for Approval of Certain Financing Arrangements > PETTON Americatel Corporation ( Americatel ), Startec Global Operating Company ( Startec, together with Americatel, the Lenders ), and Matrix Telecom, nc. ( Matrix, and collectively. with the Lenders, Petitioners ), by their attorneys, hereby respectfully request that the Public Service Commission of West Virginia ( Commission ) grant expedited advance approval under W. Va. Code Ann. $ (f) to participate in certain financing arrangements described more fully in Section 11 of this Petition. Specifically, Americatel, a 95 percent owned, direct subsidiary of MTAC Holding Corporation ( MTAC ) will lend $5 million to its affiliate, Matrix Telecom, nc., a direct, wholly owned subsidiary of MTAC, in return for an intercompany promissory note issued by Matrix payable at a period of less than twelve months after the date thereof. n addition, Startec, an indirect, wholly owned subsidiary of Americatel, will lend $3.5 million to Matrix in exchange for an intercompany promissory note payable at a period of less than twelve months after the date thereof. To enable Petitioners to meet important business and financial objectives, Petitioners hereby request that the Commission approve this Petition on an expedited basis on or before

3 January 31,2008, in order for the transaction to close immediately thereafter. Petitioners also are eager to enter these financing arrangements as quickly as possible, in order to continue to provide high quality services to consumers in West Virginia and elsewhere. n support of this,petition, Petitioners provide the follawing information:. THE COMPANES A. Matrix Matrix is a Texas corporation with principal offices located at Forest Lane, Suite 700, Dallas, Texas 75230, tel. (2 14) Established in 1991, Matrix is a competitive 0 provider of integrated communications services including local, 1 + long distance and toll-free voice services plus a wide range of data services, such as dedicated nternet access, frame relay and point-to-point transmission services, chiefly to enterprise customers. Matrix is authorized to provide service in all 50 states and the District of Columbia. n West Virginia, Matrix is authorized to provide (i) facilities-based local exchange telecommunications service pursuant to authority issued in Case No T-CN (March 30,2007); (ii) resold local exchange telecommunications service pursuant to authority issued in Case No T-CN (September 15,2005); and (iii) resold interexchange long-distance services, pursuant to authority issued in Case No T-CN (May 5, 1992). Matrix is also authorized to provide facilities-based t and/or resold interexchange and/or competitive local exchange telecommunications services across the nation. B. Americatel Americatel is a Delaware corporation with principal offices located at 4045 NW 97th Avenue, Miami, Florida 33178, tel. (305) Serving the needs of United States customers with connections to Latin America and the Caribbean, Americatel provides international and domestic facilities-based and resold long distance services, including dial 2

4 , around casual calling (i. e., 101 OXXX) service and presubscribed 1 + calling services, in each of the 48 contiguous states. n West Virginia, Americatel is authorized to operate as a reseller of interexchange telecommunications services pursuant to authority issued in Case No CN (August 23,1998). C. Startec Startec is a Delaware corporation with its principal place of business located at 7361 Calhoun Place, Suite 650, Rockville, Maryland 20855, tel. (301) Startec is a direct, wholly-owned subsidiary of Startec Global Communications Corporation ( SGCC ), also a Delaware corporation. On December 3 1,2007, pursuant to an internal corporate reorganization,, SGCC became a direct, wholly-owned subsidiary of Americatel. Startec provides long distance, nternet, and other communications services to persons and businesses residing in 49 states (all except Alaska) aild the District of Columbia, as well as Canada. n West Virginia, Startec holds. authority to provide resold interexchange telecommunications service.2 Petitioner provides its services primarily to customers who place a significant number of calls to international destinations. D. Ownership of the Petitioners Platinum Equity, LLC ( Platinum Equity ), a limited liability company formed under the laws of Delaware and headquartered in Beverly Hills, California, has indirectly held 100 percent of the equity of Matrix since 1999, and 95 percent of the equity of Americatel since July Commission Order approving that pro forma reorganization was entered in Docket No T-PC (Dec. 10,2007). n Case No T-CN (March 12, 1998), a predecessor of Startec received authority to resell telecommunications service. This authority was subsequently transferred to Startec Global Licensing Company, a former sister company of Startec, in Case No T-PC (September 10, 1999). Through apro forma restructuring approved by the Commission, Startec became the holder of the Certificate, See Case No T-PC (June 29,2007). 3

5 rj 1 Platinum Equity is a global firm specializing in the merger, acquisition and operation of 8 4 companies that provide services and solutions to customers in a broad range of business markets, including information technology, telecommunications, and logistics, manufacturing, and entertainment distributiop. Since its founding in 1995, Platinum Equity has acquired more than 70 businesses with more than $16 billion in aggregate revenue at the time of acquisition. Platinum Equity currently holds its interests in Matrix and Americatel through its wholly-owned subsidiary, MTAC. Platinum Equity acquired indirect control of Startec on July 12,2007, when it acquired indirect ownership of 100 percent of the equity in Startec. Platinum Equity holds this interest indirectly through SGCC, which is now a direct subsidiary of Americatel. As a result of this common control, Petitioners are affiliates for purposes of W. Va. Code AU (f). 11. DESGNATED CONTACTS nquiries or copies of any correspondence, orders, or other materials pertaining to this Petition should be directed to: Noel P. Brock, WV Bar No LATHAM & WATKNS LLP 600 West Broadway, Suite 1800 San Diego, California (619) ' noel. brock@lw.com With'a copy to: Richard R. Cameron Stefanie Alfonso-Frank LATHAM & WATKNS LLP lth Street, N.w., Suite 1000 Washington, D.C (202) (Tel) (202) (Fax) 4

6 richard. stefanie. com Copies of any correspondence should also be sent to the following designated representatives of Matrix, Americatel, and Startec respectively: Scott Klopack Vice President of Regulatory Affairs and General Counsel Matrix Telecom, nc Forest Lane, Suite 700 Dallas, Texas (214) (Tel) (214) (Fax) com Robert Felgar General Counsel Americatel Corporation Startec Global Operating Company 7361 Calhoun Place, Suite 650 Rockville, MD (301) (Tel) (240) (Fax) 111. DESCRPTON OF THE PROPOSED TRANSACTON Petitioners request Commission approval of the financing arrangements between Lenders and Matrix whereby Matrix will be liable to its affiliates for debt obligations totaling $8.5 million. Specifically, (i) Americatel will lend $5 million to Matrix, and (ii) Startec will lend $3.5 million to Matrix, both in exchange for a separate intercompany promissory note issued by Matrix payable on or before January 5,2009 (each a Promissory Note ). No stock or assets will be pledged as collateral for this indebtedness and no guarantee agreements will be entered into. Pursuant to the terms of each Promissory Note, the principal amount will be due in a single payment on the maturity date, including the accrued interest, prepayable at any time without 5

7 penalty. The interest rate on each Promissory Note is in line with market conditions and will match the interest rate currently being paid by Matrix for a separate debt obligation. The proceeds of the financing arrangements will be used by Matrix to refinance a portion of certain existing debt obligations to which it is currently a party. Specificaly, Matrix (together with Americatel) is currently a party to a separate credit agreement with a Lender outside of the corporate family, to which Matrix and Americatel are jointly and severally liable co- borrower^.^ The proposed financing arrangement will enable Matrix to use its affiliates cash on hand to prepay a portion of its obligations under that credit facility. V. PUBLC NTEREST ANALYSS Section of the W. Va. Code Ann. provides that the Commission may grant advance approval of affiliate transactions, including financial arrangements like those proposed by Petitioners, upon proper showing that the terms and conditions thereof are reasonable and that neither party thereto is given an undue advantage over the other, and do not adversely affect the public in this state. Petitioners present these three required showings in turn. A. Terms and Conditions of the Arrangements Are Reasonable The terms and conditions of the proposed financing arrangements, as described above, are the best reasonably obtainable by Petitioners. The terms and conditions of this intercompany 1 transaction were established internally by the Petitioners common ultimate parent, Platinum Equity, and are intended to strengthen their competitive position through access to greater Commission Order approving that financing was entered in Docket No T-PC on September 14,2006. n a separate transaction, the Commission recently approved a proposed financing arrangement whereby Petitioners will amend, restate, and refinance those debt obligations on or about April 8,2008, or after all regulatory approvals have been obtained. See Docket No T-PC (Dec. 10,2007). The loans that are the subject of this Petition are not a condition precedent to that financing transaction and do not affect the approval received in that docket. 6

8 financial resources. As members of the same corporate family, Platinum Equity and Petitioners have every incentive to establish the best reasonably obtainable conditions for the proposed financing. n addition, the interest rate in the arrangement is in line with market conditions and the terms of the arrangements are equivalent to those offered to other similarly-situated borrowers. B. The Arrangements Give No Petitioner Any Undue Advantage over Another The proposed transaction will not give any Petitioner an undue advantage over the other. The terms and conditions of each Promiqsory Note are identical: with the exception of the principal amount. The Petitioners anticipate that this transaction will allow them to better utilize ' existing funds to benefit the entire corporate family by retiring debt Matrix owes to an unaffiliated third party lender, while enabling Americatel and Startec to earn the interest Matrix otherwise will owe to that current lender. These cost savings and benefits will cause each Petitioner to become a stronger competitor in the marketplace and will allow it to continue to provide high quality and low cost telecommunications services to West Virginia residents. C. The Arrangements Do Not Adversely Affect the Public Approving the proposed transaction will serve the public interest as set forth in W. Va. Code Ann by enabling Petitioners to better utilize their available fbnds, making them incrementally stronger competitors and, therefore, allowing more consumers to benefit from competitive services more quickly and efficiently. Matrix, Americatel, and Startec all compete in West Virginia and other markets with numerous other interexchange carriers and enhanced service providers as well as the incumbent local exchange carrier and other competitive local exchange carriers. Petitioners are nondominant carriers, and are not subject to rate of return regulation. n addition, because of the 7

9 highly competitive environment in which all of the companies operate, the rates charged to customers are subject to market discipline and the services offered generally are available from. numerous other cayriers. As a result, the source of funds and capital structure of Matrix, Americatel, and Startec yould have little effect on customers in West Virginia or elsewhere. n the unlikely event that the capital structure for any of the companies becomes too costly and rates rise, customers may simply migrate to other carriers with preferred rates. Moreover, because the public interest is best served by assuring the presence of numerous telecommunications competitors in West Virginia, it is important to provide such competitors 8 with the flexibility to arrange financing in the manner they deem most appropriate to carry on business so long as there is no adverse impact on the public. To deny such flexibility would discourage new competitors from entering the state and would encourage existing competitors in the state to seek a more favorable regulatory environment elsewhere, neither of which would enhance the public interest. Finally, these financing arrangements will be transparent to consumers and consumers will benefit fiom the continued receipt of quality telecommunications services that are priced competitively. The proposed financing arrangements will not change Petitioners ownership, management or day-to-day operations in West Virginia. Matrix, Americatel, and Startec will all continue to provide competitive telecomhunications services to their customers in West Virginia, and the financings will not require any changes in rates, terms, conditions of service as a result of the proposed transaction. 8

10 V. CONCLUSON For the reasons stated above, Petitioners respectfully submit that the public interest, convenience and necessity would be furthered by expeditious Commission approval of their ' participation in the financing arrangements described herein. RESPECTFULLY SUBMTTED THS 16 day of January, Respectfully submitted, MATRX TELECOM, NC. AMERCATEL CORPORATON STARTEC GLOBAL OPERATNG COMPANY By Their Counsel:. Noel P. Brock, WV Bar No.?l3 1 LATHAM & WATKNS LLP 600 West Broadway, Suite 1800 San Diego, CA (619) Richard R. Cameron Stefanie Alfonso-Frank LATHAM & WATKNS LLP 555 Eleventh Street, N.W., Suite 1000 Washington, D.C (202)

11 STATE OF MARYLAND 6 6 COUNTY OF MONTGOMERY 0 VERFCATON, Robert Felgar, Atate that am General Counsel of Startec Global Operating Company and Americatel Corporation; that am authorized to make this Verification on behalf of Startec Global Operating Company and Americatel Corporation; and,that the statements in the foregoing document are true and correct to the best of my knowledge, information and belief. L Name: Robert Felgar / Title: General Couns6l Startec Global Operating Company Americatel Corporation * SWORN TO AND SUBSCRBED before me on the ( day of January, My Commission expires: Notary Public \ >

12 1 VERFCATON STATE OF TEXAS COUNTY OF DALLAS ', Scott Klopack, state that am Vice President of Regulatory Affairs and General Colunsel of Matrix Telecom, nc.; that am authorized to make this Verification on behalf of Matrix Telecom, nc.; and that the statements in the foregoing document are true and correct to the best of my knowledge, information and belief. i f ' Name: Scott Klopac# Title: Vice President of Regulatory Affairs and General Counsel Matrix Telecom, nc. SWORN TO AND SUBSCRBED before me on the &by of January, My Commission expires: o/ a.6 *U/O