The U.S. Bankruptcy Court approved on Wednesday the reorganization plan of Alexandria, Va.-based Metrocall, one of the nation’s largest narrowband wireless data and messaging companies. Metrocall expects to emerge from the restructuring process in early October when the plan becomes effective.
Metrocall announced in mid-April it planned to seek bankruptcy protection by the end of April, but ongoing discussions with its primary creditor constituencies, namely its secured lenders and an unofficial committee of holders of Metrocall’s subordinated notes, delayed the filing until late May.
As previously announced, Metrocall’s $133 million of existing senior secured debt will be exchanged for a $60 million secured term note to be issued by the reorganized operating entity, a $20 million paid-in-kind note to be issued by the reorganized holding company, preferred stock to be issued from the reorganized holding company with a $53 million liquidation preference and 42 percent of the new common stock of the reorganized holding company (subject to dilution of up to 7 percent for options provided to employees under a new stock option plan to be implemented after the effective date of the plan).
Metrocall’s general unsecured creditors’ claims, totaling approximately $751 million, including the holders of its unsecured public notes, will be exchanged for a pro rata share of preferred stock of the reorganized holding company with a $5 million liquidation preference and 58 percent of the new common stock to be issued (also subject to dilution of up to 7 percent).
Ninety-five percent of the total voting rights will be with the preferred stock until the stock is fully redeemed. Metrocall’s plan also provides that general unsecured creditors of its wholly owned subsidiaries will receive payment of 100 percent of the principal amount of their allowed claims. The current equity holders of the company will receive no distributions under the plan and their stock, options and warrants will be canceled when the plan becomes effective.
Throughout its restructuring proceedings Metrocall’s wireless data networks and customer support services continued to operate.
“We continue to exceed the service revenues, operating cash flow and subscriber targets provided for in our restructuring business plan,” said Vincent D. Kelly, the company’s COO and CFO.
Metrocall’s reorganization was completed without any debtor-in-possession financing and should result in substantial debt elimination and de-leveraging. Kelly said the company will continue to focus on its traditional subscriber base, emphasizing business development and retention of small business, government, healthcare and corporate customers.
The company was founded in 1965 and currently employs approximately 2,300 people nationwide. The company currently offers two-way interactive messaging, wireless e-mail and Internet connectivity, cellular and digital PCS phones, as well as one-way messaging services. Metrocall’s wireless networks operate in the top 1,000 markets across the nation and the company has offices in more than 30 states.