Paging Partners Corp. is investigating strategic options for “enhancing shareholder value,” which smells of more consolidation in the paging industry.
Laidlaw & Co. of New York has been hired as an adviser to the company. Options being considered include selling the company, bringing in a large investor or merging with a paging carrier that operates in complementary regions.
Leonard Fink, chairman and co-founder of the Freehold, N.J., company said, “We believe the company is worth more than the market value of the stock.”
Fink said the company perceives intrinsic value in the spectrum it holds and its customer base, in addition to assets of hardware and proprietary software, that exceed the market’s current value. Fink’s comment was made Thursday, concurrent with market closing. The company’s stock, which is listed on the national Nasdaq exchange, jumped 48 percent to $2.88 from a $1.94 close Wednesday. Paging Partners first announced its potential sale Wednesday. The stock then increased 3 percent from closing Tuesday at $1.88.
The company provides numeric and alphanumeric services through reseller relationships along the Northeast corridor from southern New Hampshire to northern Virginia. Alphanumeric service is Paging Partner’s strongest business, said Fink.
We operate “a high grade, high quality alphanumeric service … (but) it’s not growing as fast as we thought,” Fink commented.
Paging Partner’s customer base is difficult to determine, said Fink, as many clients buy in bulk. He offered a ballpark estimate for units in service between 65,000 and 120,000.
A key decision Paging Partners must make is whether to keep, sell or partner with another carrier to capitalize on an undeveloped radio common carrier license it purchased from the Federal Communications Commission. The license, which designates frequency use at 931 MHz, is of considerable value considering the types of services it can carry, how much Paging Partners paid for it-between $30,000 and $40,000 including filing fees and engineering-and that future spectrum in this range most likely would be auctioned, said Fink.
The license allows the company to operate in a geographical region similar to its current paging network. Fink said his company is considering developing the network for data services.
Despite so much recent industry consolidation, the prospect of selling a paging company today is less likely “with the market for paging as a whole being down so dramatically,” said Steve Weller, a research analyst at Lehman Brothers Inc., New York. Companies often use their stock to purchase other companies, which requires issuing more shares-something shareholders would likely oppose with a depressed paging market, explained Weller.
For the quarter ended June 30, Paging Partners reported a net loss of $743,000, or 14 cents per share, compared with a loss of $649,000, or 14 cents per share, for the same quarter in 1995. Revenues increased 58 percent to $1.2 million, compared with $761,000 a year earlier.
At the end of June, the company reported total assets of $2.6 million and $8.3 million including property and equipment, licenses and other assets. Liabilities totaled $2.5 million.
Paging Partners completed its initial public offering of stock in May 1994. The company secured $1.5 million in equity financing from Motorola Inc. in June 1995. In May, Paging Partners completed a private placement of about 857,000 shares of common stock that yielded net proceeds of $1.4 million of which part will be used for marketing its AlphaPlus family of enhanced data paging services.
