Arch Communications Group Inc. and MobileMedia Corp. have made additional modifications to their merger agreement, first announced Aug. 18 and initially amended Sept. 3.
The modifications place a fixed subscription price on Arch’s $217 million rights offering to MobileMedia’s unsecured creditors at $2 per share of Arch common stock. Originally, the price was to be based on the market price of Arch stock during a defined measurement period. Arch’s stock price has fallen dramatically since that agreement was made.
Also, the modifications increase by 10 million the number of rights or warrants to be received by Arch stockholders such that they would maintain a fully diluted equity interest of the combined company of 35.8 percent. Previously, the interest level was 32.2 percent at market prices of Arch common stock below $6.25 a share.
Finally, the number of warrants to be issued to the four institutional investors acting as standby buyers of the rights offering were reduced from 2.5 percent of the fully diluted equity interest to 1.9 percent.
Under the newly modified agreement, Arch will issue 14.3 million shares to MobileMedia’s unsecured creditors and 108.5 million shares in the rights offering. Additionally, Arch shareholders will get 44.8 million rights or warrants to buy Arch stock and standby purchasers will get 3.6 million warrants.
Perhaps in response to rumors of a competing bid for MobileMedia, an additional adjustment was made to the agreement in which the standby purchasers and MobileMedia’s Official Committee of Unsecured Creditors agreed to exclusivity provisions with regard to potential rival offers. Also, the bank facility acting as standby purchasers in the rights offering have agreed not to finance any opposing acquisition propositions.
MobileMedia said it expects to file a new plan of reorganization and an amended disclosure statement with the U.S. Bankruptcy Court for the District of Delaware, scheduled for Dec. 10. The company has postponed the statement several times, most recently to make the above modifications.
Arch said it plans to hold a special stockholder meeting to approve the merger in January, and both companies expect the deal to close during the first quarter.
