Metrocall Inc.’s underdog efforts to acquire Paging Network Inc. from under the nose of current suitor Arch Communications Group Inc. gained some momentum last week in the form of $337.5 million in additional financial commitments to pay for its competing bid.
Of the $337.5 million, Metrocall generated $105 million by selling off even more equity stakes in the company, including adding Nextel Communications Inc. as an equity investor. Nextel bought $75 million of equity, while existing equity holders Aether Systems Inc. and PSINet Inc. increased their holdings by $20 million and $10 million respectively.
Another $57.5 million of the total financing comes in new senior unsecured notes with warrants sold to SunAmerica, John Hancock, Canyon Partners and others. The remaining $175 million was gained through selling certain SMR licenses to Nextel.
PageNet recently entered Chapter 11 bankruptcy protection as a means of enforcing its proposed merger with Arch through a predetermined plan of reorganization. Metrocall has requested the bankruptcy court’s permission to submit a competing reorganization plan.
Metrocall’s plan offers PageNet bondholders $100 in cash and 106.8 million shares of Metrocall common stock, as well as 81 percent equity of Vast Solutions Inc., which PageNet plans to spin off. Other PageNet creditors would receive $75 million in cash and new secured notes as part of a $671.5 million bank facility.
“Our proposal brings together a Who’s Who of the telecommunications industry and offers superior value to PageNet’s stakeholders,” said William Collins, III, Metrocall chairman, president and chief executive officer. “In addition to the significant amount of cash that we have raised from Metrocall’s strategic and financial partners which will be made available to the PageNet creditors, we believe that we are better positioned to realize substantial operating synergies and to maximize shareholder value from a combined company.”
Despite the new funding commitments, Metrocall’s bid remains a longshot, say analysts. However, the infusion did spark a rally of 15 percent in Metrocall’s stock Wednesday after the announcement was made.
At RCR Wireless News deadline Friday, Metrocall was trading at $3.50.
