NEW YORK-Paging Network Inc. announced Oct. 10 it sold privately a $500 million issue of notes to help repay existing bank debt and possibly to help finance its launch of VoiceNow, its first narrowband personal communications services offering. The issue was $150 million larger than anticipated by securities analysts and debt rating agencies.
“We believe PageNet does not want to reveal much about the rollout of VoiceNow, most likely for competitive reasons; hence the private (unregistered) offering,” wrote Michael Elling, senior telecommunications analyst for Prudential Securities Inc., New York, in a research report released earlier this month. “The company has been very coy about commenting on analysts’ assumptions for VoiceNow, but it is becoming apparent that the company is preparing for an extensive launch in 1997. While many analysts believe that the market may number in the millions, we believe that PageNet may be preparing for a market number well into the tens of millions.”
The debt is being issued under Securities and Exchange Commission Rule 144A allowing companies to sell securities publicly only to large institutional investors without first being required to file formal registration and disclosure documents with the SEC.
A month after the private sale, PageNet has agreed to file a registration statement with the SEC to exchange the notes for new registered securities, according to Moody’s Investors Service Inc.
The senior subordinated notes, which mature in 2008, received speculative grade ratings of B2 from Moody’s and B from Standard & Poor’s Corp., both in New York. Moody’s also confirmed its slightly higher rating of Ba2 on PageNet’s $1 billion bank credit facility, which the rating agency said would be repaid in part from proceeds of the new debt issue.
“The new VoiceNow service, which will store messages for replay on a new subscriber unit, is expected to further enhance revenues,” said Rosemarie Kalinowski, an analyst for Standard & Poor’s, in the rating agency report on the pending debt issue. “VoiceNow is expected to be commercially available in Dallas by approximately year-end 1996 and in other major cities during 1997.”
With about 7.9 million units in service at the end of June, the Plano, Texas-based company is the largest paging carrier in the United States.
