Despite a short-lived challenge, Arch Communications Group Inc. won the battle to acquire MobileMedia Communications Inc., following approval by the U.S. Bankruptcy Court for the District of Delaware.
MobileMedia’s third amended plan of reorganization, which details the process of the merger, was OK’d by the court Monday. The merger is expected to close in early June, at which time MobileMedia will emerge from Chapter 11 protection, which it entered in January 1997.
A competing organization plan, suggesting a merger with TSR Wireless L.L.C., was withdrawn by TSR the Friday before the hearing, about a week after it was filed. TSR said the time requirements demanded by the bankruptcy court for a competing bid hindered its plans. Under a stipulation to the reorganization plan, certain MobileMedia creditors objecting to the plan were allowed to submit an alternate proposal if that plan met certain requirements, including a stipulation that MobileMedia would emerge from bankruptcy protection in a reasonable time. Because the Arch plan was so far along, switching to the TSR plan would have kept MobileMedia in bankruptcy protection for up to six more months.
The combination of MobileMedia and Arch will create the second-largest paging carrier in the country, with about 7.3 million paging subscribers.
“I think it’s an excellent fit,” said Joseph Bondi, MobileMedia chairman of restructuring. “Arch has strength in numerous markets where MobileMedia is not as strong and vice versa. I think each company will benefit from the knowledge of the other.”
In particular, Bondi said Arch provides low-cost service to the consumer segment, whereas MobileMedia is more concerned with larger, nationwide corporate accounts.
“I think this has been a good result for MobileMedia creditors,” Bondi championed. “We took the TSR offer seriously, but we were convinced the Arch combination would be the best outcome for our creditors. I feel Arch is a much better fit than TSR.”
Bondi hails from the turnaround specialist firm Alvarez & Marsal, where he is managing director. He said the process of MobileMedia’s restructuring required action on several fronts.
“MobileMedia’s problems were a result of post-merger integration difficulties when MobileMedia acquired MobileComm,” he said. “This caused several operational problems in areas like inventory management and customer service. The big job in this was to attack these operational problems one-by-one.”
Bondi said he will leave the company once the merger is closed. Several other MobileMedia executives have been named to the Arch senior management team, including Steve Gross as executive vice president of sales and marketing; H. Stephen Burdette as senior vice president of operations; and Patricia Gray in the newly created position of vice president and general counsel. There has been no further news on who else in upper management may stay on. Most employees will remain, Bondi said.
Following the announcement about the court’s approval, the two companies set a May 14 expiration date for the rights offering listed in the reorganization plan to unsecured creditors and Arch stockholders on record as of Jan. 27. MacKenzie Partners Inc. is the information agent for each of the rights offerings, the company said.
