As expected, Paging Network Inc., the largest paging carrier in the country, voluntarily filed for Chapter 11 bankruptcy protection last week, consenting to the July 14 petition for involuntary bankruptcy filed by bondholders.
PageNet said it hopes the bankruptcy status will speed its merger with Arch Communication Group Inc. PageNet’s board of directors said the competing bid from Metrocall Inc. is not superior to the Arch deal and the company will not discuss the proposal further.
In addition, PageNet said it has $50 million in debtor-in-possession financing to finance the company through its emergence from Chapter 11.
“This Chapter 11 filing has been made in order to expedite the completion of our merger with Arch,” said John Frazee Jr., PageNet chairman and chief executive officer. “We believe the plan we have filed has the support of our lenders and our bondholders, and this represents one of the most significant steps toward completing this transaction. We intend to do everything we can to expedite this process with the goal of closing our merger with Arch as soon as possible.”
Neither PageNet’s Vast Solutions Group business unit nor its Canadian subsidiary have filed for Chapter 11 and are not listed as debtors under the bankruptcy case.
PageNet’s proposed plan of reorganization outlines the merger plan with Arch, which was slightly revised in connection to the filing. Under the revised plan, PageNet senior subordinated noteholders will get 46.6 percent of the combined company’s common stock and 60.5 percent of PageNet’s interest in Vast Solutions Group, which will be spun off following the merger. PageNet stockholders will receive 5 percent of the combined company and up to 20 percent of Vast. The combined company will retain the remaining 19.5 percent share of Vast.
Prior to the revision, PageNet stockholders were offered 7.5 percent of the combined company and 11.7 percent of Vast.
Arch shareholders will get 31.4 percent of the combined company and Arch senior discount noteholders will own 17 percent.
