CFC and CoServ agree to settle bankruptcy case

HERNDON, Va., May 10, 2002 — CFC, CoServ (Denton County Electric Cooperative in Texas), and the Unsecured Creditors Committees have recently jointly submitted a letter of agreement in the U.S. Bankruptcy Court in Fort Worth, Texas.

The letter of agreement outlines the terms and conditions of a comprehensive settlement that is supported by all parties in the CoServ Chapter 11 bankruptcy cases.

The comprehensive agreement will enable a resolution among CFC, CoServ, and CoServ’s unsecured creditors. This agreement covers all entities in bankruptcy, including telecom, realty, and electric.

The terms of the settlement were submitted to the Honorable Judge Michael Lynn under seal. Plans of reorganization and related ps specifying the details of the settlement are expected to be filed jointly by the parties by approximately June 1, 2002.

The parties have agreed to suspend all activity in the pending litigation, which will be dismissed when plans of reorganization are confirmed by the Court at the close of the restructuring. The agreement will result in CoServ’s emerging from Chapter 11 bankruptcy. CoServ is expected to continue to function as a consumer-owned electric cooperative, refocused on its core utility distribution business.

With approximately $20 billion in loans outstanding, CFC is the premier private lender to the nation’s electric cooperative network. Formed in 1969, CFC provides state-of-the-art financial products and services to its 1,045 electric cooperative owners located in 49 states and four U.S. territories.


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