Sprint, EarthLink Closer to Dissolving Relationship

Sprint Corp. and EarthLink Inc. , which
at one time seemed destined to merge, moved a step closer to dissolving
their financial relationship Friday when they announced that Sprint would
publicly offer 16 million shares of EarthLink common stock at $12.50 per
share.

The relationship between the two companies began in February 1998, when
Sprint invested in the growing ISP taking receipt of 4.1 million shares of
EarthLink convertible preferred stock. It also bought an additional 1.25
million common stock shares at $45 per share. The investment gave EarthLink
a 10 percent voting interest and 30 percent economic stake in the ISP.

But by February 2001, the picture was not as bright and the two called off plans for a September merger. The change also ended a co-branding
arrangement the companies had struck.

As part of the looser relationship, Sprint gave up its first-rights status
that would have allowed it to make a counter proposal if another company
attempted to acquire EarthLink, and also gave up its seats on the EarthLink
board. However, Sprint held onto its stock and kept the option to retain its
27 percent ownership position whenever EarthLink increased its total voting
shares.

Sprint now seems ready to give up that interest as well.

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