CAI Holders May Sue Over MCI Deal

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A group of institutional investors in CAI Wireless Systems
Inc., an Albany, N.Y.-based wireless cable company, is contemplating action to block the
company's sale to MCI WorldCom.

The group -- which includes Resurgence Asset Management
LLC, a White Plains, N.Y.-based investment firm -- said in documents filed with the U.S.
Securities and Exchange Commission that it "has concerns" regarding CAI's
purchase by MCI at $28 per share.

MCI agreed in April to purchase 6.1 million shares of CAI
stock for $28 each, for a total of $171 million. That price was up from an original
purchase price of $24 per share.

Speculation was that MCI increased its purchase price after
other suitors entered the picture, particularly Sprint Corp.

MCI declined to comment, and CAI officials could not be
reached for comment.

MCI has made other wireless investments -- earlier this
month, it agreed to loan $36 million to Jackson, Miss.-based Wireless One Inc., replacing
a similar loan from Cerberus Capital Management L.P. -- and it reportedly owns the debt of
several other wireless cable companies.

The company intends to use the
multichannel-multipoint-distribution-service spectrum of these companies as a
"last-mile" connection from its national network to the customer premises.

According to the filing, the investor group asked for
additional information and to pose questions to CAI management regarding its concerns.

However, five days after that request was made, CAI
informed the group via letter that it was unwilling to do so, and it referred Resurgence
to the company's plan of reorganization, filed in November. CAI had filed for Chapter
11 bankruptcy in October.

As a result, Resurgence is considering whether to take
further steps, including a possible class-action lawsuit, to protect the interests of
CAI's shareholders and to enhance shareholder value.

Resurgence chief investment officer James Rubin said MCI is
paying about $50 per line-of-sight home for CAI, including such major markets as New York,
Boston and Washington, D.C. He added that other wireless properties in much smaller
markets have fetched as much as $60 per home.

"There are a number of public and private transactions
where the values paid are 20 percent higher per LOS household than what is being paid for
CAI," Rubin said. "[CAI is] deserving of a premium, not a discount."

Resurgence owns 9.5 percent of CAI shares, or 1.6 million

But according to the SEC filing, Resurgence and its other
affiliates purchased their CAI shares between April 26 and June 14, when the price of the
stock fluctuated between $23.63 and $28.13. CAI had traded for less than $1 per share
prior to MCI's and Sprint's interest in the market.

Rubin said his investor group hasn't decided what to
do, but he did not rule out filing a class-action suit or trying other means to block the
sale. Although the boards of directors of both CAI and MCI have approved the sale, it has
not yet gone to a vote by CAI shareholders.

Although a large number of shares are locked up by
CAI's directors, MCI and debt holders Merrill Lynch Capital Group and Moore Capital
Management -- which received equity in the company in return for extinguishing debt --
Rubin said those entities do not control enough stock to carry the day.

While it appears that all Rubin and Resurgence want is a
sufficient explanation for the price CAI agreed to, Rubin admitted that he doesn't
believe there is an appropriate response.

"I can't imagine what the sufficient explanation
could be," Rubin said. "My way of doing business is that before I take a certain
action that may be deemed to be aggressive, I give the other side the opportunity to
explain their position. Sometimes I'm convinced, and the rest of the time I go