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FILED BY METROCALL, INC.
PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933
SUBJECT COMPANY: METROCALL, INC.
COMMISSION FILE NO: 000-21924
Metrocall, Inc. is filing herewith comments made by Mr. William L.
Collins, III, Chairman, President and Chief Executive Officer of Metrocall,
during Metrocall's Second Quarter 2000 earnings results conference held on
August 9, 2000, with respect to Paging Network, Inc. The excerpts include the
text of statements made by Mr. Collins related to Metrocall's proposal to
acquire PageNet, as well as responses by Mr. Collins to questions posed during
the call related to that proposal.
ANY SECURITIES TO BE ISSUED PURSUANT TO THE METROCALL PROPOSAL TO ACQUIRE
PAGENET WILL BE ISSUED PURSUANT TO APPLICABLE PROVISIONS OF THE SECURITIES ACT
OF 1933 OR AN EXEMPTION THEREFROM. INVESTORS ARE URGED TO READ THE RELEVANT
DOCUMENTS TO BE FILED WITH THE SECURITIES & EXCHANGE COMMISSION AND/OR THE
BANKRUPTCY COURT WHICH WILL CONTAIN IMPORTANT INFORMATION ABOUT ANY TRANSACTION
INVOLVING METROCALL. INVESTORS CAN OBTAIN ANY DOCUMENT FILED WITH THE COMMISSION
FOR FREE AT THE COMMISSION'S WEB SITE, HTTP://www.SEC.GOV.
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As most of you are aware Metrocall has made an offer to purchase PageNet.
Metrocall's offer compares favorably to the competing offer on value as
follows:
Metrocall offer Other offer
To Bondholders:
Cash $100 million 0
Stock 86.8 mil shares 83.3 mil shares
Total value to
Bondholders* $626.1 mil $390.7 mil
(recovery) ($0.52) ($0.34)
VAST 81.0% 60.5%
To Shareholders:
Stock 13 mil shares 8.9 mil shares
Total value to
Stockholders* $78.8 mil $41.7 mil
VAST 11.6% 20.0%
*Excludes any value for VAST, assumes MCLL close on Aug 7th of $6.06 and APGR
close of $4.69.
Metrocall retains the right to increase our offer. On August 4th
Metrocall filed a motion to end PageNet's exclusive period to file a plan based
on the other offer and to have the court grant us our 10 business days of due
diligence, submit our offer and plan and have the court consent to a "competing
plan" process where both plans from Metrocall and Arch are ultimately voted on
by the bondholders. With respect to timing, Metrocall's motion contemplates the
following:
- August 21 - Hearings on exclusivity and due diligence motions by Metrocall
and no shop and breakup fee motions.
- August 24-Sept 8th - Metrocall due diligence period
- September 11th - Metrocall files definitive plan documents & disclosure
statement as well as FCC application
- Sept 22nd - Metrocall & Arch file "final" plans. Metrocall/PageNet file DOJ
application.
- October 3rd - File amended joint disclosure statements
- Oct 10th - hearing on disclosure statement, solicitation period begins
- November 9th - estimated approval from DOJ
- December 1st - estimated approval from FCC & Metrocall shareholder meeting
- December 7th-8th - Plan confirmation hearing.
We currently believe that the earliest the competing plan could close
is early to mid November. This means our plan could close within approximately
30 days of that. We think to have a process, which enables the bondholders to
vote on two plans will yield the highest value for the creditors. We also note
that our process allows each plan to be increased as to value based on the
September 22nd "final" plan due date I just outlined. Metrocall feels that when
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combined with our strategic and financial partners we are in a better position
to offer superior value.
*****
A quick comment on the recent actions taken by Metrocall involving the
bankruptcy filing against Paging Network. We are very serious in the
process. We are in it to win. The investors in Paging Network, in our belief,
would fare extremely better as a part of Metrocall.
As Ryan Langdon, an analyst with ABN AMRO stated in a report published
Monday, "As we reported earlier, Metrocall made a friendly acquisition overture
to the PageNet board, which was rejected as "inferior" although our previously
published report calculated that the Metrocall bid provided a recovery to
PageNet bondholders which was 47% higher that the incumbent Arch bid. We
continue to believe that there is the potential for deals to be sweetened, or
that all three companies may eventually combine, but for now just point out that
the superiority of the Metrocall bid has improved versus that of the Arch bid.
Currently, the Metrocall deal value PageNet bonds at 55.6 cents on the dollar,
while Arch bid values them at 30.8 cents on the dollar. The valuation premium
now stands at 80.5% (versus 47% earlier), which we believe entitles Metrocall to
a seat at the table as the court endeavors to determine how the recovery to
impaired lenders can be maximized."
*****
Q: Bill, can you just sort of outline for us maybe some of the findings
you've uncovered in your initial due diligence on the PageNet operations. We've
probably gotten more than enough guidance from the Arch management team on what
they think it might take to get the PageNet operations up to par. Have you found
anything different or what's your expectation on capital use there?
A: The key there is that we have not been provided due diligence. The
only information we have is what has been supplied publicly or what we have
heard Roy and Ed speak about in some of their conferences that we have attended.
So, I really can't give you any guidance whatsoever regarding that.
We are hopeful that the bankruptcy court will open up that process and allow us
our due diligence which we can hopefully gain in the next couple of weeks. We've
really limited ourselves to just a ten day period in order to gain all of that
information. We know the questions to ask, we know where to look. As you might
imagine, both of us being national companies, we know that there are significant
synergies available just because we compete across the street from most of them,
so facilities, people, personnel, networks, engineering costs, technical
personnel, huge amounts of costs could be taken out in that area, but I just
couldn't quantify any of that for you at this point.
Q: So, are you suggesting that there is at least a better than average
possibility that you could sweeten the offer as you said earlier?
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A: Again, it's all going to be determined on due diligence. But,
certainly, that opportunity is there.
