Officials at MobileMedia Corp. said they will not postpone the Oct. 14 bankruptcy court hearing to review its disclosure statement, setting in motion the legal process necessary to complete its acquisition by Arch Communications Group Inc. and putting to rest rumors of another company making a counter offer.
MobileMedia requested several extensions of the hearing date while it was soliciting acquisition offers this summer. When Arch picked up that gauntlet, MobileMedia had to modify its plan of reorganization to include the tenets of the merger agreement, said spokeswoman Krista Grossman.
If the judge approves the disclosure statement, it will be attached to the plan of reorganization and sent to MobileMedia creditors for approval.
“When creditors vote on the plan of reorganization, they’re voting on the merger,” Grossman said. If approved, the plan will be sent back to the judge for final consent and a date will be set to close the deal, at which time MobileMedia will emerge from bankruptcy status and officially become part of Arch. The process is expected to be completed by the first quarter of next year.
With the Oct. 14 date quickly approaching, time is running out for another company to make a counter offer for MobileMedia. Following Arch’s announcement, rumors surfaced that Metrocall Inc. was planning to interfere with the process and offer MobileMedia a better deal. Although MobileMedia did solicit Metrocall earlier in the summer, officials at Metrocall said there are no plans to make a move on MobileMedia, pending the outcome of this week’s hearing.
“No, we’re not going to be at the table,” said William Collins, III, Metrocall president and chief executive officer. “There is nothing that Metrocall is going to do to look at that company prior to the 14th … We may be interested in the company, but it’s a done deal at that point.”
Technically, the deal won’t be completed until the judge gives a final approval following a vote by MobileMedia creditors. And while MobileMedia’s definitive merger agreement with Arch prohibits the company from soliciting other acquisition offers, Chapter 11 law requires it to review any unsolicited bids and to accept the most lucrative one, even if that means breaking the Arch agreement.
However, any such offer would have to be a much better deal than Arch’s, and likely would have to include the $25 million breakup fee MobileMedia would be liable for if it breaks the merger agreement with Arch. Regardless, Collins said not to expect any such attempt by Metrocall.
“This would be the last company we’d want to bid up,” he said.
Grossman said MobileMedia has received no other offers at this point.
However, should the judge not approve Arch’s bid to acquire MobileMedia, the company would be fair game again, although that is highly unlikely.
Once the judge approves the disclosure statement, the process will be so far along that both the courts and the Federal Communications Commission would frown upon anyone attempting a counter bid, said sources. “There’s been plenty of time to bid on MobileMedia,” said one source who wished to remain anonymous. “The courts and the FCC are not going to like someone trying to enter the game at this late stage.”
Collins dismissed as “erroneous” a rumor that the Metrocall’s board voted to make a move on MobileMedia, but was denied the financing by its banks to do so.
“If we wanted to put together the financing to go after MobileMedia, we could have,” he said. “We’re probably the only player with the ability to put together the financing to complete a deal in this industry … Banks are falling all over themselves to lend us money.”
The company just last week announced it completed its acquisition of AT&T Wireless Inc.’s Advanced Messaging Division. While it created a new $100 credit facility as part of that acquisition, few in the industry believe Metrocall would want to attempt another merger so soon, even if it could, especially since it has yet to fully complete its integration of ProNet Inc., which the company closed on in January.
