Morgan Group Progresses On Acquisition of New Credit Facility

    ELKHART, Ind.--May 8, 2001--The Morgan Group, Inc. (AMEX:MG) today reported continued progress in obtaining a new credit facility to replace the Company's facility that expired on January 28, 2001.
    According to Anthony T. Castor III, President and Chief Executive Officer of The Morgan Group, the Company has received commitment letters from several financial institutions to provide a replacement credit facility. Each of the commitment letters is conditioned upon satisfactory completion of due diligence procedures as well as the Company meeting various financial covenants and requirements prior to closing. A tentative agreement has been reached with the Company's major shareholder Lynch Interactive Corp. (AMEX:LIC) to invest $2.0 million into Morgan, and this represents a key component in obtaining the new credit facility. Subject to approval by the Lynch Interactive Board, the new investment would involve the purchase of 1.0 million newly issued Morgan Group `B' shares. This would increase Lynch Interactive's ownership from 55.6% to 68.5%.
    It is contemplated that The Morgan Group Board of Directors, subsequent to the proposed share purchase by Lynch Interactive, will grant to all shareholders a warrant providing the right to purchase a share of Morgan Group stock at $9.00 per share for each share held. In such event, Morgan Group `A' shareholders would be provided a one-time 30 day window during which the `A' shareholders only would have the right to reduce their strike price by up to 1/3.
    Although the Company had no borrowings against the credit facility that expired on January 28, 2001, the facility is necessary to collateralize letters of credit totaling $6.7 million that are outstanding primarily to secure losses on liability insurance claims.
    According to Castor, the Company's lack of a credit facility since January caused a mandatory "Going Concern" qualification in the Company's audit report on the financial statements for the year ended December 31, 2000. "We believe that once a new credit facility is in place, our auditors should be able to remove the Going Concern qualification from their opinion", noted Castor.
    The Morgan Group, Inc., through its subsidiaries Morgan Drive Away, Inc., and TDI, Inc. ("Morgan Drive Away"), is the nation's largest company managing the delivery of manufactured homes, commercial vehicles and specialized equipment in the United States.
    This press release contains forward-looking statements, including initiatives relating to profitability and the prospects of obtaining a replacement credit facility. Such statements are subject to a number of material factors that could cause the statements or projections contained therein to be materially inaccurate. Such factors include, without limitation, successful implementation of profit initiatives, overall economic conditions, competition for customers and drivers, and risks associated with business operations, acquisitions, expansion into new business lines, and changes in the regulatory environment.