WASHINGTON – In a surprise move, National Telecom PCS Inc., which lost its C-block American Samoa personal communications services license last year due to default but which has been fighting for it ever since, has proposed to take over all assets and debt of Pocket Communications Inc., currently trying to work out of Chapter 11 bankruptcy; the deal could be worth $1.5 billion. If it is successful, the Federal Communications Commission could regain the full price for Pocket’s channels.
NatTel-a small, minority-owned company based in Stamford, Conn., headed by Jack Robinson-filed an emergency motion with the U.S. Bankruptcy Court for the District of Maryland in Baltimore last Friday for permission to submit a reorganization plan for Pocket that, if accepted, could come up for a shareholder and creditor vote at the same time as Pocket’s new plan, which was sent to the court Sept. 29. The court could rule on NatTel’s request as early as this week, thus giving it the right to participate in the Oct. 16 hearing on Pocket’s plan; if it denies the company’s request, NatTel will have to wait until the end of October, when Pocket’s exclusive right to submit a plan runs out.
The company has other litigation pending against Pocket pending at the FCC, including a petition to deny its licenses. That action would be pulled under NatTel’s proposal. An antitrust suit filed in Connecticut just prior to Pocket’s bankruptcy filing in March seeks $1.1 billion in damages due to antitrust; Robinson would drop that as well.
Robinson, who decided just last week to make the move, plans to finance what he characterized as a “hostile, unsolicited takeover” in part via a new partnership with White River Partners, a subsidiary of White River Corp., which has a penchant for financing companies in Chapter 11. White River could invest as much as $25 million in the deal.
“We think it is in the best interest of the FCC to consider this deal,” Robinson said. He added in a written statement, “By taking over the licenses, now mired in bankruptcy, infusing substantial new capital and assuming the FCC debt at face value, the NatTel proposal will result in PCS service being offered in Pocket’s markets as expeditiously as possible with a minority entrepreneur, which was the original goal of the C block. And by assuming the FCC debt at face value, NatTel’s proposal offers maximum financial benefits to the American people instead of seeking a bail out.”
According to Robinson, Pocket’s current funding will run out by Thanksgiving or early December, and it is not known whether Pacific Eagle, its largest investor, will lend the company additional cash to survive after that time. Pacific Eagle reportedly wants to replace Pocket’s current board of directors, including founders Dan and Jan Riker, and has petitioned the court to do so. Robinson has discussed his takeover plan with FCC counsel and Pacific Eagle. He hopes the court will “go for a bird in the hand.”
Despite the commission’s recent adoption of financial reorganization rules for floundering C-block players, Robinson believes Pocket would have a difficult time surviving long enough to forge any World Trade Organization-fostered foreign financing or to take any of the four options crafted by the FCC.
“We have to get in there now with our plan and disclosure statement or Pocket will run out of money and it will be too late to propose anything other than liquidation,” Robinson said. While there are those who have viewed Robinson’s C-block efforts during the past year as “crazy,” he replied, “Yes, I’m just as crazy as Bernard Ebbers.”
