NEW YORK-Telephone and Data Systems Inc., Chicago, announced Dec. 23 a definitive agreement to merge its Minneapolis-based American Paging Inc. subsidiary with TSR Paging Inc., Fort Lee, N.J., to create a new carrier called TSR Wireless L.L.C.
For some time, industry analysts have identified American Paging as a likely candidate for sale by its parent, with TSR Paging as a likely buyer. API had reduced, although not eliminated by a long shot, its net loss per share at the end of the latest third quarter, compared with the same quarter in 1996. However, its service revenues had decreased by 11.1 percent during the third quarter of 1997 compared with the same period a year earlier.
Mitchell Sacks, president of TSR Paging, will assume the presidency of TSR Wireless, of which TSR Paging will own a 70-percent interest and TDS will own the remaining 30 percent. The merger-subject to regulatory approval and the review of independent directors selected by American Paging-is expected to be completed by March.
The new limited liability company will operate what Sacks and LeRoy T. Carlson Jr., president and chief executive officer of TDS, call the nation’s first commercial two-way paging network using the ReFLEX 25 protocol, which American Paging is in the process of launching in Pittsburgh.
“With our combined base of 2.2 million customers and the dynamic growth rates of both companies, we expect [TSR Wireless] to establish itself as one of the nation’s top five paging companies within the next year,” Carlson and Sacks said in a joint statement.
“For the customers of both companies, the transition will be virtually seamless. In the short term, there will be no interruption in services or change in costs. In the long term, we intend that the new company will provide even better service and a broader range of advanced product choices.”
TSR Paging, founded in 1975, is the largest privately owned paging carrier in the United States. With 1.45 million customers, it is ranked seventh among domestic paging companies. TSR, which operates in 10 states, has 700 employees, 900 transmitters in service and about 170 of its own retail stores, as well as a large reseller program.
American Paging Inc., started in 1980, has approximately 800,000 subscribers and is ranked 12th. The carrier has more than 600 employees and operates in 21 states. It also has a well-developed direct channel distribution system and holds PCP and narrowband personal communications services licenses.
“The addition of American Paging’s Florida, Minnesota, Virginia, Wisconsin, Utah and Oklahoma markets gives TSR Wireless the ability to create stronger and more comprehensive relationships with national real estate and wireless communications companies,” said Jeff Oram, vice president of real estate for TSR Paging.
“It is expected that TSR will increase its number of retail stores from approximately 170 at year-end 1997 to [more than] 300 at year-end 1998.”
American Paging is strong in the Southeastern and Midwestern states, with its largest markets in Florida, the Minneapolis-St. Paul metropolitan area and Washington, D.C. TSR, strongest in the Northeast and Southwest, has as its largest markets the New York, Chicago and San Francisco metropolitan areas.
The combined company will be able to provide paging service covering approximately 75 percent of the population of the United States. Where the two carriers’ networks overlap-in markets that include the Chicago and Washington, D.C., metropolitan areas and Arizona-the new company plans to operate both until a selection is made to migrate customers to a single network that best serves their needs, Carlson and Sacks said.
TSR Wireless will take over American Paging’s national customer service center in Oklahoma City. The center, which opened last April, affords customers toll-free access around-the-clock.
The mechanics of the planned merger will work this way: TDS, which holds approximately 82 percent of American Paging’s stock, will buy through a wholly owned subsidiary all of the outstanding publicly held API equity at a cash price per share of $2.25.
TDS then will contribute “substantially all” of the assets and “certain, limited liabilities” of American Paging to TSR Wireless, according to the merger announcement from TDS and TSR Paging. TSR Paging would contribute all of its assets and liabilities to the new company.
TSR Wireless, the merged company, would not assume approximately $170 million in debt that American Paging owes its parent, TDS. However, the plan also calls for TDS to give TSR Wireless an option, under certain conditions, to “acquire certain inter-company liabilities” that American Paging owes to Telephone and Data Systems.
