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)
June 3, 1999
ARCH COMMUNICATIONS GROUP, INC.
(Exact Name of Registrant as Specified in its Charter
Delaware
(State or Other Jurisdiction of Incorporation)
0-23232 31-1358569
(Commission File Number) (IRS Employer Identification No.)
1800 West Park Drive, Suite 250, Westborough, MA 01581
(Address of principal executive offices) (Zip Code)
(508) 870-6700
Registrant's Telephone Number, Including Area Code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets
Description of Transaction
On June 3, 1999, Arch Communications Group, Inc. ("Arch") completed its
acquisition of MobileMedia Communications, Inc. ("MobileMedia") through the
merger of MobileMedia with and into a wholly owned subsidiary of Arch (the
"Merger"). The Merger was pursuant to an Agreement and Plan of Merger, dated as
of August 18, 1998 and amended as of September 3, 1998, December 1, 1998 and
February 8, 1999 between Arch and MobileMedia (the "Merger Agreement").
In the Merger, MobileMedia was merged with and into a wholly owned subsidiary
of Arch. Immediately following this merger, Arch contributed all of the
outstanding stock of the surviving corporation to Arch Communications, Inc.,
which in turn contributed such stock to Arch Paging, Inc. Immediately prior to
the Merger, MobileMedia's parent company had contributed all of its assets to
MobileMedia. In connection with the Merger, MobileMedia's subsidiaries were
consolidated into a single subsidiary of MobileMedia which became an indirect
wholly owned subsidiary of Arch as a result of the Merger.
The execution of the Merger Agreement was announced on August 20, 1998. On
January 26, 1999, Arch's stockholders approved the Merger.
Nature of Business
Prior to its acquisition by Arch, MobileMedia operated one of the largest
paging companies in the United States, with approximately 3.1 million units in
service as of March 31, 1999. Between January 30, 1997 and June 3, 1999,
MobileMedia and several affiliated companies operated as debtors-in-possession
under Chapter 11 of the Bankruptcy Code. Through its sales offices, nationwide
retail distribution network, company-operated retail stores and resellers,
MobileMedia has offered local, regional and national coverage to subscribers in
all 50 states and the District of Columbia. This has included local coverage to
each of the 100 most populated metropolitan markets in the United States. Arch
currently intends to continue MobileMedia's business substantially in the manner
conducted by MobileMedia immediately prior to the Merger.
Merger Terms
In the Merger:
1. Arch paid approximately $479.0 million in cash to certain secured creditors
of the MobileMedia.
2. Arch paid a total of $58.0 million to pay fees and expenses, repay all
borrowings outstanding under MobileMedia's post-petition credit facility, pay
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pre-petition priority claims and certain post-petition claims incurred by
MobileMedia and pay principal and accrued interest on certain senior notes
assumed by MobileMedia in its acquisition of Dial Page in 1995.
3. Arch issued 14,344,969 shares of its common stock ("Arch Common Stock") to
unsecured creditors of MobileMedia.
4. Arch issued to four unsecured creditors who agreed to act as standby
purchasers ("Standby Purchasers") warrants to acquire 3,675,659 shares of
Arch Common Stock on or before September 1, 2001 at a warrant exercise price
of $3.01 per share.
Source of Funds
In order to consummate the Merger, Arch generated the necessary funds as
follows:
1. Arch sold additional shares of Arch Common Stock in a rights offering to
MobileMedia's unsecured creditors and sold shares of Arch Common Stock and
Class B common stock to the Standby Purchasers. These purchasers paid a price
of $2.00 per share for a total of 108,621,797 shares and a total purchase
price of $217.2 million.
2. Arch issued to the holders of Arch Common Stock and Series C preferred stock
on January 27, 1999 non-transferable rights to acquire up to 44,893,166
shares of Arch Common Stock at a price of $2.00 per share. A total of 308,892
non-transferable rights were exercised. Because non-transferable rights to
acquire 44,584,274 shares were not exercised, Arch has distributed in their
place warrants to acquire an equivalent number of shares of Arch Common Stock
at the warrant exercise price of $3.01 per share.
3. Arch and Arch's principal operating subsidiary, Arch Paging, Inc. ("API"),
borrowed a total of $318.0 million consisting of (a) $147 million in
principal amount of 13 3/4% Senior Notes due 2008, and (b) $171 million in
additional borrowings under API's secured credit facility with The Bank of
New York, Royal Bank of Canada, Toronto Dominion (Texas), Inc., Barclays
Bank, PLC and other financial institutions.
Board and Stockholder Approvals
The Merger Agreement and the Merger were unanimously approved by Arch's Board
of Directors on August 14, 1998. The terms of the Merger Agreement and Merger
were determined on the basis of arms'-length negotiations. Prior to the
execution of the Merger Agreement, neither Arch nor any of its affiliates had
any material relationship with MobileMedia other than mutual reselling
arrangements providing for the sale of each of Arch's and MobileMedia's paging
services.
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Directors and Officers of Arch
Edwin M. Banks, a designee of W.R. Huff Asset Management Co., L.L.C., and H.
Sean Mathis, a designee of Whippoorwill Associates, Inc., became members of the
Arch Board of Directors upon consummation of the Merger, and Arch is required to
nominate for election as directors one designee of W.R. Huff and one designee of
Whippoorwill so long as W.R. Huff or Whippoorwill, as the case may be, holds
securities of Arch representing at least 10% of the combined voting power of all
outstanding securities of Arch (5% in the case of the initial renomination of
such designees). Both W.R. Huff and Whippoorwill were Standby Purchasers under
the Merger Agreement. In addition, a designee of W.R. Huff has been granted
observation rights at all meetings of the Arch Board following the Merger so
long as a designee of W.R. Huff is serving on the Arch Board.
Upon completion of the Merger, the directors of Arch are: Edwin M.
Banks, James S. Hughes and Allan L. Rayfield, whose terms will expire at the
annual meeting of stockholders to be held after the end of the fiscal year
ending December 31, 2001, C. Edward Baker, Jr., R. Schorr Berman and John
Kornreich, whose terms will expire at the annual meeting of stockholders to be
held after the end of the fiscal year ending December 31, 2000, H. Sean Mathis,
John B. Saynor and John A. Shane, whose terms will expire at the annual meeting
of stockholders to be held after the end of the fiscal year ending December 31,
1999.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
MobileMedia's financial statements and the pro forma financial information
required by Item 7 will be filed within 60 days of the date of this report.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 18, 1999 ARCH COMMUNICATIONS GROUP, INC.
By: /s/ C. Edward Baker, Jr.
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C. Edward Baker, Jr.
Chairman of the Board and
Chief Executive Officer
