NEW YORK-Horizon Cellular Group, a Malvern, Pa., wireless carrier, is getting out of the cellular business, but its top management is seeking a new play in personal communications services.
Backed by many of the same investors who cashed out of Horizon through staged liquidation this year, Horizon’s chief executives have formed Triton Communications, headquartered in Horizon’s old offices in Malvern. Triton’s mission is to acquire PCS licenses in rural areas that might not otherwise get built out quickly. In exchange, Triton would finance, construct and operate the new PCS systems.
Horizon announced Nov. 22 it had signed a definitive agreement to sell the last of its properties, covering a population of 410,000 in Maryland and Pennsylvania, to Dobson Communications Corp. of Oklahoma City for $75 million in cash. The sale, which is subject to Federal Communications Commission approval, is expected to close during the first quarter of 1997.
Once the sale to Dobson is concluded, Horizon will have received approximately $577 million, or $180 per pop, for all of its cellular properties, which covered a population of 3.2 million, the company said.
“In the last five years, we have provided high quality wireless services to areas covering over 3 million people, created 400 new jobs in rural America and provided handsome returns to our investors,” said Michael Kalogris, president and chief executive officer. “We are very pleased with the outcome.”
In April, Bell Atlantic Nynex Mobile of Bedminster, N.J., announced it would buy a rural service area in Georgia from Horizon. In July, Palmer Wireless Inc. of Fort Meyers, Fla., completed the acquisition of another of Horizon’s rural service areas in Georgia. In September, Sygnet Wireless Inc. of Canfield, Ohio, sold its first public debt issue in order to finance its purchase of Horizon properties in rural service areas in New York and Pennsylvania. In October, PriCellular Wireless Corp. of New York issued public debt to pay for its acquisition of Horizon properties in Kentucky.
Horizon was established in April 1991 to provide cellular telephone service to RSAs in the United States. Brentwood Associates, J.P. Morgan Capital and a venture capital arm of Donaldson, Lufkin & Jenrette Securities Corp. had held an equity stake in Horizon on a five-to-seven-year timetable, said Bruce M. Hernandez, Horizon chief financial officer. The agreement was to double investors’ money in five years, according to Kalogris.
“There is the whole thing out there of the medium-size fish eating the smaller fish,” Hernandez said. “We didn’t feel a compelling need to grow, but the people buying into the business wanted to continue to grow.”
Morgan Stanley & Co., New York, which served as Horizon’s financial adviser, decided on a piecemeal liquidation strategy, Hernandez said. Taking Horizon public was ruled out because initial public offerings are designed to finance companies that plan to expand, he added.
“We are very pleased with the robust values that Horizon has delivered to its investors,” said Paul Taubman, managing director of Morgan Stanley.
Hernandez said Horizon’s top management seeks to stay together as a team. “Backed by some of the same investors, we’re looking for a PCS play in a joint venture with one of the largest PCS carriers out there in the secondary and tertiary markets, on the perimeter of their markets,” he said.
Kalogris said he is negotiating with three groups for PCS licenses.
