Keytech Offers To Exchange BTC Notes For Preferred Shares

Hamilton, Bermuda: 5 August 2002 - KeyTech Limited announced to the Bermuda Stock Exchange (BSX) today that the Board of Directors has approved an offer to acquire all 7¾% Redeemable Notes of Bermuda Telephone Company Limited (a wholly owned subsidiary of KeyTech Limited) in exchange for 8% Cumulative Redeemable Convertible Preferred Shares of KeyTech on the basis of three Preferred Shares for every two Bermuda Telephone Company Notes.

As will be detailed in a forthcoming Information Memorandum, which is expected to be distributed in mid-August, the offer will be comprised of 2,613,445 KeyTech Preferred Shares offered in exchange for $26,134,450 in aggregate principal amount of the BTC Notes.

The exchange offer is conditional in its entirety on the approval of the KeyTech Common Shareholders which will be sought at the Special General Meeting to be held on September 12, 2002.

The BTC Notes bear interest at the rate of 7¾% per annum, payable quarterly. The BTC Notes are due to mature on 31st March 2012, but the BTC has had the right, at its option, anytime since 31st March 2002 to redeem the BTC Notes early. The BTC Notes are unsecured.

The KeyTech Preferred Shares will be preferred over KeyTech Common Shares as to dividends and return of capital. The KeyTech Preferred Shares will entitle the holder to a preferential dividend of 8% per annum, payable quarterly. They will be redeemable only at the option of KeyTech at a price equal to their initial issue price, namely $10, together with any accrued but unpaid dividend.

The Directors of KeyTech believe the exchange of the BTC Notes for Preferred Shares and the resulting reduction of debt will further strengthen KeyTech's capital structure.

This exchange offer is available only to existing BTC Note holders. No offer will be made unless and until the Information Memorandum has been filed with the Registrar of Companies.