Educational Funding of the South, Inc. Announces Acceptance of Tenders in Tender Offers

FRANKLIN, Tenn., May 3, 2011 /PRNewswire/ -- Educational Funding of the South, Inc. ("Edsouth"), today announced that it has accepted for exchange and has accepted to purchase for cash those of its Student Loan-Backed Revenue Bonds, Senior Series 2007-1 A-1, A-2 and A-3 Bonds (collectively, the "Existing LIBOR Bonds"), its Florida Educational Loan Revenue Bonds, Senior Series 2003FL-A-1, 2003FL-A-2, 2004FL-A-1, 2004FL-A-2, 2004FL-A-3, 2004FL-A-4, 2005FL-A-1, 2005FL-A-2, 2005FL-A-3, 2005FL-A-4 Student Loan-Backed Revenue Bonds, Senior Series 2007-1 A-6, 2007-1 A-7, 2007-1 A-8, 2007-1 A-9, 2007-1 A-10 and 2007-1 A-11 (collectively, the "Existing Senior Auction Rate Bonds"), its Student Loan-Backed Revenue Bonds, Subordinate Series 2007-1 B-1 (collectively, the "Existing Subordinate Auction Rate Bonds") and its Florida Educational Loan Revenue Bonds, Junior-Subordinate Series 2003FL-C-1, 2004FL-C-1 and 2005FL-C-1 (collectively, the "Existing Junior-Subordinate Auction Rate Bonds" and together with the Existing Senior Auction Rate Bonds and the Existing Subordinate Auction Rate Bonds, the "Existing Auction Rate Bonds" and together with the Existing LIBOR Bonds, the "Existing Bonds") issued under the Indenture of Trust, dated as of September 1, 2003, between Edsouth and Wells Fargo Bank, National Association, as successor trustee (the "Existing Indenture") as identified in the table below.  The Offers are part of a plan by Edsouth to refinance student loans securing its auction rate bonds.  The Offers expired at 12:01 a.m. New York City time, on April 27, 2011 (the "Expiration Date").  The Existing Bonds were subject to an offer to exchange (the "Exchange Offer") and offer to tender for cash (the "Cash Tender Offer" and, together with the Exchange Offer, the "Offers"), the terms and conditions of which are set forth in the Tender Offer Statement of Edsouth, dated as of March 28, 2011, as supplemented on April 1, 2011 (the "Tender Offer Statement").

In determining which bonds to accept for purchase or exchange in the Offers, Edsouth followed the terms and conditions set forth in the Tender Offer Statement. Based on the count by Wells Fargo Bank, National Association, the exchange agent and depositary for the Offers, as of the Expiration Date, $1,219,812,500+ aggregate principal amount of Existing Bonds were validly tendered in the Offers.  Edsouth will notify bondholders of the acceptance of validly tendered bonds on May 4, 2011.

Tendered bonds that were not accepted by Edsouth will be returned to the applicable bondholders.  The consideration to be paid to Existing Bonds accepted by Edsouth in the Offers will be paid in the amounts and in accordance with the terms set forth in the Tender Offer Statement, which is expected to occur on the settlement date of May 9, 2011. All tendered Existing Bonds accepted for purchase or exchange will be cancelled on the settlement date.

The Offers are subject to a number of conditions that must be satisfied, including the condition that Edsouth is able to generate the requisite cash necessary to complete the Offers by issuing its new Student Loan Asset-Backed Notes, 2011-1 Series pursuant to a new discrete indenture of trust as described in the Tender Offer Statement.

The aggregate principal amount of Existing Bonds that Edsouth has accepted to purchase or for exchange represents approximately 53%+ of the total outstanding principal amount of Existing Bonds under the Existing Indenture.

Morgan Stanley & Co. Incorporated and RBC Capital Markets, LLC acted as the dealer managers for the Offers.  

D.F. King & Co., Inc. acted as the information agent for the Offers.  

Wells Fargo Bank, National Association acted as the exchange agent and depository for the Offers.

This press release is for informational purposes only and is not an offer to purchase or a solicitation of an offer to purchase or exchange any Existing Bonds.

About Educational Funding of the South, Inc.

Edsouth is a nonprofit, public-benefit corporation created in 1985 under the law of the State of Tennessee, organized for the purpose of promoting access to higher education by acquiring postsecondary education loans under Title IV of the Federal Higher Education Act of 1965.  Edsouth received its 501(c)(3) determination and operates as a 150(d) corporation in the states of Tennessee and Florida.  Its principal office is located at 501 Corporate Centre Drive, Suite 320, Franklin, Tennessee 37067.  Prior to January 1, 1996, Edsouth was known as Volunteer State Student Funding Corporation.  Edsouth has implemented various programs to assist eligible borrowers in financing the costs of post-secondary education at eligible schools, colleges and universities.  In addition to educational funding, Edsouth has several student outreach initiatives for the purpose of increasing awareness of college, career, and financial aid opportunities by providing free college and career planning resources and services for students and parents.

Forward-Looking Statements

Forward-looking statements in this release, such as the scheduled settlement date of the Offers, are based on current expectations.  This press release contains forward-looking statements that involve a variety of business risks and other uncertainties that could cause actual results to differ materially.  Words such as "expects," "intends," "plans," "projects," "believes," "estimates" and similar expressions are used to identify these forward-looking statements.  These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict.  Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate.  Actual outcomes and results may differ materially from what is expressed or forecast in these forward-looking statements.  Forward-looking statements speak only as of the date made.  There is no obligation to update any forward-looking statements to reflect the events or circumstances arising after the date as of which they are made.  As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on the forward-looking statements included in this release or that may be made elsewhere from time to time by, or on behalf of, Edsouth.

* CUSIP is a registered trademark of American Bankers Association.  None of the Corporation, the Dealer Managers, the Trustee or the Exchange Agent makes any representation as to, or takes responsibility for, the accuracy of such CUSIP numbers. CUSIP numbers are provided for convenience of reference only.

+ For the Student Loan-Backed Revenue Bonds, Senior Series 2007-1 A-1, DTC recorded tendered bonds based on the original face amount of the bonds.  As a result, the principal amount shown by DTC as validly tendered and not withdrawn differs.

SOURCE Educational Funding of the South, Inc.

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