WASHINGTON-Alexandria, Va.-based Metrocall Inc. made good on its promise to “add strategic geographic and synergistic acquisitions during the first half of the year” by signing definitive agreements to purchase two more radio common carriers. The company reported three other buys in February.
Metrocall, which had experienced past disappointments in the acquisitions arena, will close the deals to buy the assets of PageAmerica Group Inc. of Paramus, N.J., and certain assets of Source One Wireless Inc. in Chicago during the third quarter. The combined purchases will add 520,000 subscribers to Metrocall’s customer base, bringing its total to nearly 2 million.
Along with its subscriber base, PageAmerica brings to the table a 70-person sales force, 14 local sales offices, 630 resellers and four company-owned retail outlets. Services include PageNotes alphanumeric messaging, PageTalk voice mail and nationwide paging capability.
Source One Wireless, which Metrocall said is “one of the fastest-growing paging companies in the nation,” offers 900 MHz messaging, and Metrocall is buying only its nine-state Midwest region. Like PageAmerica, it owns four retail establishments and has relationships with 1,600 others. The sale price will be based on a multiple of trailing-quarter annualized cash flow, which could be adjusted at closing based on “certain defined operating performance criteria.”
“The acquisition of PageAmerica underscores Metrocall’s commitment to execute on its targeted strategy,” said William L. Collins III, Metrocall’s president and chief executive officer. “This not only builds upon our strong base in New York but, coupled with [Source One Wireless], we are dramatically increasing our presence in two of the premier markets in the country.”
The buyout, when completed, will help put an end to PageAmerica’s continuing financial problems. The paging provider, with operations in New York City and Chicago, has been struggling since last year, said president and chief operating office Kathleen Parramore. It defaulted on loan payments in December, and it failed to maintain its active trading status on the American Stock Exchange.
“We were looking to be bought or to be recapitalized,” Parramore told RCR. “The rhythm in the industry today is to consolidate, and we’ve been competing against several huge carriers. You really need 2 million subscribers to compete.”
The Metrocall/PageAmerica deal had been in the works for about three months, and was handled by Brad Busse of Denver-based Daniels and Associates. The $78.5 million sale price ($55 million in cash and $23.5 million in Metrocall stock) is subject to adjustment, depending on how both companies are performing at the time the sale is closed. Upon closing, according to a written statement, “PageAmerica will liquidate and, after satisfaction of all its liabilities, any remaining assets will be distributed to its shareholders.”
PageAmerica’s outstanding senior debt totaled $34 million as of December 31. Subordinated debt stood at $15 million, and other liabilities added up to $3.5 million. After applying the majority of the proceeds to paying down debt, PageAmerica will put some $4 million in escrow for 18 months to cover any other bills. Shareholders may receive little or nothing for their PageAmerica stock, which at presstime was valued at 11/16ths per share.
Parramore said PageAmerica employees were “upbeat about the merger,” and that Metrocall principals had assured them that their jobs were secure. She could not, however, talk about her future with Metrocall.
