IQI and ATC Form Aegis

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IQI and ATC Communications Group completed their stock-for-stock merger to form Aegis Communications Group, a name that suggests security and protection.

Company leaders would like to take the name to heart as they aim to protect shareholders from potential dilutive effects caused by a lawsuit filed against it in a breach of contract case filed by an ATC option holder in Kansas federal court. Thayer Equity Investors III, one of the company's shields and the largest shareholder of IQI Inc., Dallas, will provide an additional $4 million in financing to the ATC Group to waylay any negative results from the lawsuit.

ATC is appealing a summary judgment of about $2.4 million, including prejudgment interest and costs. ATC will post a $3 million appeal bond with $1 million remaining for working capital.

The company claims that the judgment is in error and that the plaintiff's claims are without merit. It is hoped that the additional subordinated debt will not need to be issued.

"The $4 million serves as protection against a possible final resolution of the lawsuit," said Scott Guffey, vice president of finance, mergers and acquisitions for ATC, now Aegis. "Hopefully we won't have to draw on it."

If all of the contemplated indebtedness is funded, ATC would have, on a pro forma basis consolidated with IQI, $13.7 million in subordinated debt outstanding. ATC issued Aegis additional warrants to purchase up to 350,000 shares of ATC common stock at an exercise price of $2.375 per share.

Currently ranked among the largest publicly traded teleservices providers, Aegis will offer complete, integrated marketing services including customer acquisition, customer care, and marketing research to leading corporations. The combined company has more than 8,500 teleservices professionals, approximately 6,000 teleservices workstations and 26 call centers.

The joint client base includes American Express, AT&T, Bell South, First USA, Procter & Gamble, U.S. West Communications, Universal Card, and Western Union, among others. On a historical pro-forma basis, Aegis' 1997 revenues were approximately $250 million. Aegis will maintain major offices in Dallas, Los Angeles, Atlanta and New York.
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