WebLink Wireless Inc. found its white knight.
The paging and messaging carrier said late Thursday it scored a deal with Sun Capital Acquisition Corp., which buys out cash-strapped companies and then funds them back to health. WebLink said the move will help it emerge from bankruptcy as a private company—but will leave its stockholders with nothing.
During its eight months in bankruptcy, WebLink has been able to restructure its operations and focus on its core telecommunications and business customers, said N. Ross Buckenham, the company’s new president and chief executive officer. As a result, WebLink has been cash-flow positive for the past six months. Now, with Sun Capital’s move to buy the company, Buckenham said WebLink can look at restructuring its balance sheet. He said WebLink expects to emerge from bankruptcy virtually debt free.
WebLink filed for Chapter 11 bankruptcy in May.
Under the new reorganization plan, which WebLink filed with the bankruptcy court, Sun Capital will pay off WebLink’s creditors with cash, and Sun Capital will become WebLink’s majority owner. Some of WebLink’s management, as well as some of its creditors, will also become owners in the new, privately held WebLink. WebLink said a majority of its creditors support the deal.
“This is really the first new capital coming into the messaging industry in several years,” Buckenham said, adding that it shows the value of paging and messaging services. “We’re enormously excited about this.”
WebLink said the transaction is subject to Sun Capital’s successful due diligence and approval by the bankruptcy court and the Federal Communications Commission. The company said it expects the plan to be finalized by late April.
“We believe the resulting strong balance sheet combined with our operational excellence, our advanced narrowband technology network and the largest nationwide footprint will strengthen our position as the ‘wireless data network of choice’ for our many telecommunications partners and business customers,” Buckenham said.
The paging and messaging industry has undergone a variety of major setbacks over the past few years. Device provider Motorola Inc. and infrastructure provider Glenayre Technologies Inc. evacuated last year, and privately held carrier TSR Wireless quietly shut down in 2000.
And just last month, wireless data carrier Motient Corp and Arch Wireless Inc., the nation’s largest messaging carrier, both filed for Chapter 11 bankruptcy. Both also filed plans of reorganization in hopes of cutting their debt and interest payments.
