PRG-Schultz Announces Redemption of Senior Notes, Senior Convertible Notes & Series A Preferred Stock

PRG-Schultz International, Inc. (Nasdaq: PRGX), the world’s largest recovery audit firm, today announced that it has initiated the redemption of its 11.0% Senior Notes Due 2011, its 10% Senior Convertible Notes Due 2011 and its 9% Series A preferred stock. The redemption date for the Senior Notes and the Senior Convertible Notes is October 4, 2007, and the redemption date for the Series A preferred stock is October 19, 2007. The current aggregate principal amount outstanding of the Senior Notes is $51.5 million and of the Convertible Notes is $55.8 million. The aggregate liquidation preference of current outstanding Series A preferred stock is $8.4 million. As an alternative to redemption, holders of the Senior Convertible Notes may elect to convert their notes into PRG-Schultz common shares at a conversion price of $6.50 per share, and holders of the Series A preferred stock may elect to convert their shares into PRG-Schultz common shares at a conversion price of $2.84 per share. Since PRG Schultz’s common stock is currently trading significantly above these conversion prices, the Company expects that holders of the convertible notes and of the preferred stock will choose to convert their holdings into common stock rather than be redeemed. The Company also announced today that it has entered into a financing agreement with Ableco Finance LLC to provide a $96 million senior secured credit facility which will be used to redeem the Senior Notes and any Senior Convertible Notes and Series A preferred stock that do not convert into common stock prior to the applicable redemption dates. The facility will also be used to fund the Company’s general working capital needs. The credit facility consists of a $20 million revolving credit facility, a $45 million term loan, and a delayed funding facility of up to $31 million to fund the redemption of any convertible securities that do not convert prior to the redemption dates. Funding of the credit facility is subject to various customary conditions. The credit facility will mature on the fourth anniversary of the closing and will replace the Company’s current $20 million secured revolving credit facility. Holders of record of the Senior Notes and the Senior Convertible Notes as of close of business on September 1, 2007 are receiving the September 15 interest payment in accordance with the terms of the applicable indentures and notes, and as provided in the terms of the Series A preferred stock, the applicable liquidation preference increased, effective September 15, 2007, to reflect the undeclared Series A preferred stock dividend payable on that date. The new Series A preferred stock liquidation preference is approximately $136.87 per share, and as a result each share of Series A preferred stock is convertible at the option of the holder into 48.186732 shares of the Company’s common stock until October 18, 2007. About PRG-Schultz International, Inc. Headquartered in Atlanta, PRG-Schultz International, Inc. is the world's leading recovery audit firm, providing clients throughout the world with insightful value to optimize and expertly manage their business transactions. Using proprietary software and expert audit methodologies, PRG industry specialists review client purchases and payment information to identify and recover overpayments. Forward Looking Statements In addition to historical information, this press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include both implied and express statements regarding the Company’s financial condition and liquidity, the redemption of the Senior Notes, the Senior Convertible Notes and the Series A preferred stock, the availability of funding under the new financing, and the anticipated conversions of the Senior Convertible Notes and the Series A preferred stock into common stock. Such forward looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to differ materially from the historical results or from any results expressed or implied by such forward-looking statements. Risks that could affect the company’s future performance include the company’s ability to satisfy the terms and conditions for funding of the new credit facility, market conditions for the company’s common stock that could affect the conversions of the Senior Convertible Notes and the Series A preferred stock, and other risks generally applicable to the company’s business. For a discussion of other risk factors that may impact the company's business and the success of its restructuring plan, please see the company’s filings with the Securities and Exchange Commission, including its Form 10-K filed on March 23, 2007. The company disclaims any obligation or duty to update or modify these forward-looking statements.