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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): August 19, 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 August 19, 1998, MobileMedia Corporation and MobileMedia
Communications, Inc. issued the press release filed herewith as Exhibit 99.1,
disclosing negotiations regarding a definitive merger agreement for Arch
Communications Group, Inc. to acquire MobileMedia Corporation.
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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: August 19, 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 CONTACTS:
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August 19, 1998 Arch -- Robert W. Lougee, Jr. 508-870-6771
MobileMedia -- Krista Grossman (Media) 201-969-4959
Lynne Burns (Investor) 201-969-4999
ARCH COMMUNICATIONS AND MOBILEMEDIA
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IN NEGOTIATIONS FOR MERGER
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Westborough, MA and Fort Lee, NJ (August 19, 1998) --- Arch Communications
Group, Inc. (Nasdaq:APGR) and MobileMedia Corporation announced that they are in
negotiations regarding a definitive merger agreement for Arch to acquire
MobileMedia in a transaction that would create the nation's second largest
paging company with more than seven million customers throughout the United
States. The companies indicated that, while negotiations are in the final
stages, no assurance can be given that a definitive agreement will be signed.
The transaction, if consummated, would combine Arch's extensive nationwide
presence in small- to mid-sized markets with MobileMedia's strength in large
markets and major national accounts, creating a leader in the paging industry
with projected pro forma 1998 fourth quarter annualized operating cash flow
(Earnings Before Interest, Taxes, Depreciation and Amortization, or "EBITDA") of
more than $240 million, excluding the benefit of potential cost savings, and
projected pro forma 1998 fourth quarter annualized net revenues exceeding $815
million.
Arch said that the combination, if consummated, would reduce Arch's leverage to
approximately 5.6 times projected pro forma 1998 fourth quarter annualized
EBITDA based on pro forma debt of approximately $1.35 billion. In addition, Arch
expects a further increase in cash flow and decrease in leverage from estimated
cost reductions and operating synergies to be implemented during the first year
following the acquisition, which are currently estimated to result in annualized
cost savings of approximately $25 million when fully realized.
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Under the terms of the agreement under negotiation, Arch would acquire
MobileMedia for a combination of cash, the assumption of certain liabilities,
and the issuance of Arch common stock and warrants to acquire Arch common stock.
The transaction as contemplated would be implemented through a Plan of
Reorganization that MobileMedia would file with the U.S. Bankruptcy Court for
the District of Delaware. The transaction would be subject to a number of
conditions, including (i) approval by Arch's shareholders; (ii) confirmation of
the plan of reorganization by a final order of such Bankruptcy Court; (iii)
approval by a final order of the Federal Communications Commission of the
transfer of MobileMedia's FCC licenses to Arch; and (iv) approval (or expiration
of waiting periods) under the Hart Scott Rodino Act.
Terms of Transaction Under Negotiation
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Under the terms of the transaction under negotiation, holders of MobileMedia's
secured bank debt, which aggregates $649 million in principal amount, would
receive 100% of such principal amount in cash, comprised of a $479 million
payment from Arch and $170 million in proceeds from MobileMedia's pending sale
of its tower assets to Pinnacle Towers, Inc.
Arch intends to finance the $479 million cash payment with $262 million in
proceeds from additional bank debt and an additional note offering and $217
million in cash from the proceeds of the issuance of Arch common stock upon the
exercise of transferable rights to be issued by Arch to MobileMedia's unsecured
creditors, whose claims aggregate approximately $480 million. Assuming full
exercise of such rights, such unsecured creditors (or their assignees) would be
entitled to acquire for cash between 34.3% and 52.1% of Arch's common stock
(depending upon the market price of the Arch common stock during a designated
period), and warrants to purchase another approximately 2.5% of the Arch common
stock.
Arch's existing shareholders (including its Series C preferred shareholders)
would also receive warrants in connection with the transaction to purchase 7% of
Arch's common stock. All warrants would have an exercise price of $8.19 per
share.
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Under the proposed terms of the transaction, certain of MobileMedia's largest
unsecured creditors would agree in connection with the transaction to act as
standby purchasers with respect to any shares of Arch common stock and warrants
not purchased upon the exercise of such rights. As consideration for their
backup commitments, such creditors would receive warrants to purchase another
2.5% of Arch's common stock.
In the transaction under negotiation, MobileMedia's unsecured creditors would
receive, in addition to the rights, between 17.2% (if the rights entitled them
to purchase 52.1%) and 31.3% (if the rights entitled them to purchase 34.3%) of
Arch's common stock (depending upon the market price of the Arch common stock
during a designated period).
Therefore, on a diluted basis, the existing Arch shareholders (including the
Series C preferred shareholders) would hold, as of the effective date of the
transaction under negotiation, between 34.4% and 30.7% of Arch's common stock,
while MobileMedia's unsecured creditors would hold between 65.6% (if the
existing Arch shareholders hold 34.4%) and 69.3% (if the existing Arch
shareholders hold 30.7%) of such stock.
Arch would also pay the administrative expenses of MobileMedia as of the
effective date of the transaction (with a reduction of the shares to be
distributed to MobileMedia's unsecured creditors if and to the extent that such
expenses exceed $34 million), and would repay expected borrowings under
MobileMedia's debtor in possession borrowing facility. MobileMedia's existing
shareholders would not receive any consideration under the merger or the plan of
reorganization, and their shares of MobileMedia common stock would be canceled.
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Arch-MobileMedia Combination
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Arch believes that a combination of Arch and MobileMedia would produce an
industry leader with substantial organizational, financial and strategic assets
and that, operationally, the two companies are an ideal fit with complementary
areas of sales, service coverage, and channels of distribution. A combination
would give Arch comprehensive market coverage in all 50 states and a strong
presence in key channels of distribution, including retail. In addition, Arch
believes that MobileMedia's two narrowband personal communications services
(NPCS) licenses should allow Arch to accelerate the deployment of a NPCS network
and expedite the introduction of new paging products and services.
MobileMedia indicated that the transaction, if consummated, would allow it to
complete its Chapter 11 reorganization and emerge from bankruptcy as part of a
strong industry leader.
MobileMedia Corporation, Fort Lee, NJ, is one of the largest providers of paging
and personal communications services in the United States, reaching more than 95
percent of the U.S. population, including the top 100 metropolitan statistical
areas. With 3,100 employees, MobileMedia offers local, regional and nationwide
coverage to more than three million subscribers in all 50 states, the District
of Columbia and in the Caribbean. The Company operates two one-way nationwide
FLEX(TM) networks and is currently constructing two nationwide narrowband PCS
networks for which it owns licenses. MobileMedia Communications, Inc., doing
business as MobileComm(R), is a wholly-owned subsidiary of MobileMedia
Corporation. MobileComm can be found on the Internet at www.mobilecomm.com.
MobileComm is not associated with MobilComm, Inc. of Cincinnati, OH.
Arch Communications Group, Inc., Westborough, MA, is the third largest paging
company in the United States based on paging units in service and second largest
based on operating cash flow. Founded in 1986, it provides narrowband wireless
messaging services, principally paging, to more than four million subscribers
nationwide. Arch's 2,700 employees operate from approximately 200 offices and
company-owned stores in 42 states. Additional information on Arch is available
on the Internet at www.arch.com.
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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 Arch's
most recent Annual Report on Form 10-K. Although Arch and MobileMedia believe
the expectations reflected in any forward-looking statements are based on
reasonable assumptions, they can give no assurance that their expectations will
be attained. Factors that could cause actual results to differ materially from
their expectations include the challenges of integrating the businesses of Arch
and MobileMedia, the future capital needs following a merger, the uncertainty of
additional funding, and other risks. Any forward-looking statements represent
the judgment of Arch and MobileMedia as of the date of this release. The
companies disclaim any intent or obligation to update any forward-looking
statements.
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