Metrocall Pages Bankruptcy Court

Struggling messaging service Metrocall, Inc. and most of its subsidiaries have filed voluntary petitions for reorganization under chapter 11 of the U.S. Bankruptcy Code today in the U.S. Bankruptcy Court in Delaware. Prior to filing, Metrocall entered into agreements with its primary creditor constituencies establishing the terms and conditions of a pre-negotiated plan of reorganization proposed in the disclosure statement and plan of reorganization to be filed later Monday with the Bankruptcy Court.

The Alexandria, Va.-based Metrocall, the nation’s second largest messaging service behind Arch Wireless, which itself filed for Chapter 11 protection in December, will continue to operate its nationwide business operations and expects to continue to provide all paging and wireless messaging services without interruption or disruption during its reorganization process.

Metrocall’s pre-negotiated plan will involve a corporate restructuring and a recapitalization of the company’s existing debt that will include the establishment of a primary holding company, the consolidation of Metrocall’s four existing and wholly-owned operating subsidiaries into a single operating entity, and the transfer of Metrocall’s intellectual property and FCC licenses into a single wholly-owned license subsidiary.

According to Metrocall’s court filing, the company believes the corporate restructuring will help the company to “further benefit from the resulting operational efficiencies.” Additionally, Metrocall’s current operations are generating enough cash flows that no debtor-in-possession financing will be needed to maintain operations or to provide the cash distributions necessary to implement the proposed plan upon emergence from chapter 11.

In conjunction with the court proceedings, Metrocall filed Monday a variety of “first day motions” including motions seeking court permission to continue payments for employee payroll and health benefits; maintain cash management programs; retain legal, financial, and other professionals to support Metrocall’s reorganization; and impose certain restrictions on the trading of Metrocall’s outstanding voting stock.

In accordance with applicable law and court orders, creditors who have provided credit, goods or services prior to Monday’s filing may have pre-petition claims against Metrocall or its subsidiaries, action on which will be stayed pending court authorization of payment or consummation of a plan of reorganization.

Metrocall will continue to focus on its traditional customer base, emphasizing business development and retention of consumer, 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.

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.

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