OTV Onetravel Hlgs

OneTravel Holdings, Inc. (AMEX: OTV): Benefits That Would Result From the Sale Include -- Minimizing OTV's exposure to risk associated with SunTrips Subsidiary -- Retaining distribution deal to be non-exclusive reseller of SunTrips tour packages -- Strengthens OTV's balance sheet - elimination of money losing subsidiary -- Re-emphasized focus on online/offline full service travel model OneTravel Holdings, Inc. (AMEX: OTV), a leading online and offline provider of travel and leisure services announced that it has reached an agreement in principle to sell FS SunTours, Inc., which operates SunTrips, to an affiliate of Crystal Finance LLC. Specific terms of the transaction will include the establishment of an operating line of credit facility for SunTrips followed by an equity infusion at the time the purchasers finalize the structure of the acquisition. As part of the sale transaction, OTV has committed to provide an undetermined amount of financing. The terms and amount of the OTV provided financing will be dependent upon the amount of liabilities the purchaser assumes, although OTV's maximum commitment has not been established, it is expected to be in the range of $2.5 million - $3.0 million, assuming all liabilities are assumed by the purchaser. The parties expect the sale to close within 45 days, but closing is subject to execution of a mutually acceptable definitive agreement. In anticipation of the sale, Matthew C. Holliday, Senior Vice President of Planning was named President of SunTrips. Commenting on the agreement, OTV President Marc Bercoon stated: "We have been working diligently with the principals of Crystal for a few weeks now and we hammered out the major terms of the deal late last night. SunTrips has been around for 28 years and has tremendous brand recognition in its markets, however, we have determined that tours packages are a product we want to sell and not own. We have proven in the online/offline travel business that we can sell travel products. Upon execution of the agreement, Crystal will bring in a group that has great experience in the tour business and will allow us to maintain a distribution deal to sell the SunTrips products. The distribution deal will allow us to profit from the continued operation of the SunTrips franchise and remove the risk associated with the business that has greatly contributed to OTV's operating loss during the recently completed fiscal year. Also, the fact that the purchasers have committed to arrange for an operating line of credit in the interim gives us great confidence that the transaction will close." "We see tremendous opportunity in the SunTrips business. We feel that because of various factors, the business has been underperforming for the past several years and it is clear that with OTV's stated focus on the full service online/offline travel business, the SunTrips operation is not a good fit for OTV's core competency. OTV made it clear to us that if we wanted to complete a transaction, we had to move quickly and we have committed to do so. There are a lot of quality people at SunTrips and we plan to work with them to bring SunTrips back to profitability and build a more national presence for the business." stated Fabrizzio P. Busso-Campana, a principal with Crystal Finance LLC. OTV also commented that the sale of SunTrips will greatly improve its balance sheet. Commenting on the impact on the OTV balance sheet, Marc Bercoon added: "We recently disclosed that as of June 30, 2005 our working capital position was a negative $33 million. Approximately $16 million of the current liabilities related to either past due or future obligations of FS SunTours, Inc., which is the SunTrips business. We will not have to pay most all of these liabilities based upon the terms agreed to in principle. Additionally, $12.5 million of the liabilities relate to the seller note issued in connection with OTV's April 2005 acquisition of OneTravel, Inc., which comes due March 15, 2006, after exercising all available extensions. Lastly, approximately $6 million of the liabilities were related to the promissory note that OTV issued in connection with the acquisition of Farequest Holdings, Inc. in February 2005. This Farequest note was converted to common stock at $20 per share on October 13, 2005." "As we have repeatedly said, we are focused on building an online/offline full service travel business. That part of our business has been progressing very well as indicated by the increased gross bookings in our updated guidance. The sale of SunTrips will greatly strengthen the financial position of our company and provide us with the opportunity to profit from selling the SunTrips products, which I am confident we can do. We are executing on our plan and although we still must address the $12.5 million seller note from the OneTravel acquisition, we are in a much better position to address that in the months ahead after this sale closes." stated OTV Chairman and CEO William Goldstein About OneTravel Holdings, Inc. (AMEX:OTV) OneTravel Holdings, Inc. (www.onetravelholdings.com) derives all of its revenues from its travel business subsidiaries, Farequest Holdings, Inc., operating under the name 1-800-CHEAPSEATS (www.cheapseats.com) and OneTravel, Inc. (www.onetravel.com), both of which are leading online and offline providers of a full range of travel services, and FS SunTours, Inc., which sells leisure and vacation travel packages under the SunTrips(R) brand (www.suntrips.com). The Company derives additional revenue from operating other travel related web sites including www.discounthotels.com and www.11thhour.com. Statements in this news release about anticipated or expected future revenue or shareholder value growth or expressions of future goals or objectives, including statements regarding market conditions or whether current plans to grow and strengthen the Company's business will be implemented or accomplished, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. When used in this release and documents, the words "anticipate", "believe", "estimate", "expect" and similar expressions, as they relate to the Company or its management, are intended to identify such forward-looking statements, but are not the exclusive means of identifying these statements. All forward-looking statements in this release are based upon information available to the Company on the date of this release. Any forward-looking statements involve risks and uncertainties, including the risk that the Company will be unable to grow or strengthen its business due to a lack of capital or a change in market demand for its products and services or to fully or effectively integrate all business units or the inability to realize anticipated cost savings or revenue and stockholder value growth opportunities associated with the acquisitions of Farequest Holdings, Inc. and OneTravel, Inc. The Company has previously mentioned in conference calls that gross bookings are not equal to gross revenues under generally accepted accounting principles, so no inference can be made about profitability based on gross bookings unless expressly stated by the Company. There is also no certainty that the Company will be successful in its quest to secure strategic alliances in its efforts to close the sale of the SunTrips business. The Company is also subject to those risks and uncertainties described in the Company's filings with the U.S. Securities and Exchange Commission ("SEC"), including the Company's historical losses and negative cash flow, its need for additional capital, including to finance the $12,500,000 promissory notes payable to the former stockholders of OneTravel, Inc., and that future financing, if available, will dilute the Company's current common stockholders. Additionally, forward-looking statements concerning the performance of the travel and leisure industry are based on current market conditions and risks, which may change as the result of certain regulatory, political, or economic events, a shift in consumer travel preferences, as well as those risks and uncertainties described in the Company's SEC filings, which could cause actual events or results to differ materially from the events or results described in the forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements. For a complete description of the items approved at the annual stockholder's meeting, the Company's proxy statement is available for viewing in the Company's SEC filings.