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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 11, 1998
MOBILEMEDIA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-26320 22-3253006
(State or other (Commission File No.) (IRS Employer
jurisdication Identification No.)
of incorporation)
Fort Lee Executive Park, One Executive Drive, Suite 500,
Fort Lee, New Jersey 07024
(Address of principal executive offices)
(Zip Code)
(201) 224-9200
(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On September 3, 1998, MobileMedia Corporation and MobileMedia
Communications, Inc. issued the press release filed herewith as Exhibit 99.1,
announcing the closing of the sale of 163 transmission towers to Pinnacle
Towers Inc. and an agreement in principle to make certain modifications to the
Merger Agreement, dated August 18, 1998, with Arch Communications Group, Inc.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: September 11, 1998 MOBILEMEDIA CORPORATION
By: /s/ David R. Gibson
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David R. Gibson
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Page
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99.1 Press Release
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FOR IMMEDIATE RELEASE
For: MobileMedia
Media Contact: Krista Grossman (310) 966-5515
Investor Contact: Lynne Burns (201) 969-4999
MOBILEMEDIA COMPLETES TOWER SALE TO
PINNACLE FOR $170 MILLION
MOBILEMEDIA AND ARCH MODIFY MERGER AGREEMENT TO
ENHANCE PROTECTION TO MOBILEMEDIA'S UNSECURED CREDITORS
Tower Sale Key Component of Merger Agreement with Arch
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FORT LEE, New Jersey, September 3, 1998 - MobileMedia Corporation today
announced (i) the closing of MobileMedia's previously announced sale of 163
transmission towers to Pinnacle Towers Inc. for $170 million in cash; and (ii)
an agreement in principle to make certain modifications to its Merger Agreement,
dated August 18, 1998, with Arch Communications Group, Inc.
CLOSING OF TOWER SALE
MobileMedia said that the sale of its tower site assets to Pinnacle, approved by
the U.S. Bankruptcy Court for the District of Delaware on August 10, 1998,
represents significant progress towards completion of its Chapter 11 proceeding
and is a key component of its Merger Agreement with Arch Communications Group,
Inc. MobileMedia has distributed the $170 million cash proceeds to its secured
creditors, who have a lien on such assets to secure the principal amount of $649
million owing to them.
"The successful and timely completion of the sale of our transmission towers has
enabled us to reduce our secured debt substantially and move one step closer to
emergence from Chapter 11," said Joseph A. Bondi, Chairman Restructuring of
MobileMedia and Managing Director of turnaround consultants Alvarez & Marsal.
"The proceeds from the tower sale were used to repay $170 million of our
pre-petition secured debt, which is the first step in our plan to provide 100%
recovery to our secured creditors. The payment of the tower sale proceeds to the
secured creditors also satisfies one of the conditions of our merger agreement
with Arch Communications."
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Under the terms of the tower sale to Pinnacle, announced July 8th, MobileMedia
will continue to own and utilize transmitters, antennas and other equipment
located on the 163 towers through a lease arrangement for an initial lease
period of 15 years at an aggregate annual rental of $10.7 million. In addition
to the towers sold to Pinnacle, MobileMedia leases space on more than 4,000
transmissions towers nationwide for its paging transmission systems.
MERGER AGREEMENT
In response to recent capital market volatility, and in order to provide greater
closing certainty for Arch's pending acquisition of MobileMedia, MobileMedia and
Arch have agreed to modify the terms of the rights offering to MobileMedia's
unsecured creditors by adding a "Market Price Protection Mechanism." If the
Market Price Protection Mechanism is triggered, MobileMedia's unsecured
creditors would be entitled to purchase shares of Arch common stock at a lower
price than originally provided for, and Arch shareholders would receive warrants
or, at their option, rights to maintain a fully diluted equity interest equal to
32.175% of the combined company.
Specifically, the principal terms of such modifications are:
1. Following confirmation by the Bankruptcy Court of the Second
Amended Plan of Reorganization, there will be an additional
measurement period to determine the market value of Arch's
common stock used to compute the number of shares issued in
the rights offering to MobileMedia's unsecured creditors.
2. If the price of Arch's common stock during this subsequent
market price measurement period were below $6.25 per share,
then the new Market Price Protection Mechanism would apply.
3. The Market Price Protection Mechanism would adjust the
exercise price of the rights issued to MobileMedia's unsecured
creditors to 80% of Arch's stock price as measured during this
new market price measurement period, but in no event would the
exercise price be less than $2.00 per share. If there is any
such adjustment, no warrants to purchase common stock would be
issued to MobileMedia's unsecured creditors.
4. If the Market Price Protection Mechanism were triggered, Arch
shareholders would receive, at their option, either warrants
or rights to acquire shares of Arch common stock, to enable
Arch shareholders to maintain a 32.175% fully diluted equity
interest of the combined company. The right to subscribe for
additional shares of Arch common stock would be at the same
exercise price as the rights issued to MobileMedia's unsecured
creditors.
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5. To the extent Arch shareholders do not exercise such rights,
they would receive an equivalent number of warrants to acquire
shares of Arch common stock to enable them, if such warrants
were fully exercised, to maintain a 32.175% fully diluted equity
interest in the combined company. Such warrants would be
exercisable until September 1, 2001 at a fixed exercise price
reflecting a 20% annually compounded premium (calculated through
September 1, 2001) over the exercise price of the rights.
Assuming a December 31, 1998 closing date, and depending on the
exercise price of the rights, the warrants issued to Arch
shareholders (if the Market Price Protection Mechanism were
triggered) would have an exercise price ranging between $3.25
and $8.11 per share.
6. If the Market Price Protection Mechanism were triggered, the
four institutions acting as standby purchasers for the rights
offering would continue to receive warrants to purchase 2.5%
of the fully diluted equity interest of the combined company.
These warrants would be identical to those issued to Arch
shareholders.
Bondi commented: "We are delighted that we have been able to negotiate a
satisfactory arrangement with Arch, the Standby Purchasers, and the Official
Committee of Unsecured Creditors that addresses the interests of all concerned,
and that will afford us the opportunity to move expeditiously to confirm
MobileMedia's Second Amended Plan of Reorganization."
C. Edward Baker, Jr., Chairman and Chief Executive Officer of Arch, said: "We
have agreed to such amendments to the Merger Agreement and Standby Purchase
Commitments in order to secure greater transaction certainty in the event that
current capital market volatility still applies at the time of the rights
offering. In the event that the Market Price Protection Mechanism is not
triggered during the subsequent market price measurement period, then all
aspects of the original Merger Agreement remain intact."
A Bankruptcy Court hearing to consider a motion by MobileMedia to approve
certain provisions of the Merger Agreement, including certain mutual no-shop and
exclusive dealing provisions, break-up fees to Arch and MobileMedia and the
reimbursement of a portion of Arch's expenses, is scheduled for September 4,
1998 at 10:30 a.m. in the United States Bankruptcy Court for the District of
Delaware.
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MobileComm(1) is one of the largest providers of paging and personal
communications services in the United States. MobileComm offers local, regional
and nationwide coverage in all 50 states, reaching markets of over 95 percent of
the U.S. population. The Company operates two one-way nationwide FLEX networks
and is currently constructing two nationwide narrowband PCS networks for which
it owns licenses. MobileMedia Communications, Inc. (MobileComm) is a
wholly-owned subsidiary of MobileMedia Corporation. MobileComm can be found on
the World Wide Web at http://www.mobilecomm.com.
Safe harbor statement under the Private Securities Litigation Reform Act of
1995: Statements contained in this news release which are not historical fact,
such as forward-looking statements concerning future financial performance and
growth, involve risks and uncertainties, including those described in
MobileMedia's Disclosure Statement, filed with the Bankruptcy Court on August
25, 1998. Such statements are subject to various factors that could cause actual
results to differ materially from those set forth in forward-looking statements.
Any forward-looking statements represent the judgment of MobileMedia as of the
date of this release. The Company disclaims any intent or obligation to update
any forward-looking statements.
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1 Not associated with MobilComm, Inc. of Cincinnati, Ohio.
