Educational Funding of the South, Inc. Announces Results of Tender Offer

KNOXVILLE, Tenn., May 21 /PRNewswire/ -- Educational Funding of the South, Inc. ("Edsouth"), today announced the results of its "Modified Dutch Auction" cash tender offer with respect to its outstanding Educational Loan Revenue Bonds.  The tender offer is part of a plan by Edsouth to refinance student loans securing its auction rate bonds.  The tender offer expired at 11:59 p.m. New York City time, on May 17, 2010 (the "Expiration Date").  Edsouth will notify bondholders of the acceptance of validly tendered auction rate bonds on May 21, 2010.  Tendered auction rate bonds that were not accepted by Edsouth will be returned to the applicable bondholders.  It is expected that tendering bondholders whose auction rate bonds are accepted will be paid on May 26, 2010.  The prices were determined as described in the offer to purchase dated April 20, 2010 (the "Offer to Purchase").  Based on the count by D.F. King & Co., Inc., the depositary for the tender offer, as of the Expiration Date, $287,050,000 aggregate principal amount of auction rate bonds were validly tendered in the tender offer.

In determining the clearing price for each series of auction rate bonds purchased, Edsouth followed the "Modified Dutch Auction" procedure. Edsouth determined, in its sole discretion, the aggregate principal amount of auction rate bonds in any series.  Edsouth followed criteria specified in the Offer to Purchase in making such determinations.  Edsouth selected tenders at the lowest price first and continued to accept offers at prices in ascending order until it selected the amount of auction rate bonds of such series that it determined to purchase.  The clearing price for any series was the highest price for any auction rate bonds of that series that were accepted for purchase by Edsouth.

In accordance with the terms and conditions of the tender offer and based on the count by the depository, Edsouth expects to accept for payment $287,050,000 aggregate principal amount of auction rate bonds at the following purchase prices and for the following series of auction rate bonds:

The aggregate principal amount of auction rate bonds that Edsouth expects to purchase represents approximately 17% of the total outstanding principal amount of auction rate bonds under the 1993 Indenture.

Morgan Stanley & Co. Incorporated acted as the dealer manager for the tender offer.  

D.F. King & Co., Inc. acted as the information agent and depositary.  

This press release is for informational purposes only and is not an offer to purchase or a solicitation of an offer to purchase any auction rate 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 104 North Seven Oaks Drive, Knoxville, Tennessee 37922.  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.

Educational Funding of the South, Inc. Contact

Ron Gambill, Chairman & CEO: (615) 771-8505

Forward-Looking Statements

Forward-looking statements in this release, such as the scheduled expiration of the tender offer, 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 involves 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.

SOURCE Educational Funding of the South, Inc.