WebLink Wireless Files for Chapter 11

Ten days after claiming strong growth in its Wireless Data Division, with
revenues up 50 percent from its previous quarter, Dallas’ WebLink Wireless
Inc. Thursday said it has filed a petition for Chapter 11 bankruptcy.

Filed in the U.S. Bankruptcy Court for the Northern District of Texas, the
company plans to depend on Chapter 11 to convert its high yield notes
(totaling approximately $470 million in accreted value) into equity. The
outfit has secured debt of approximately $89 million, none of which is
anticipated to be converted to equity in any reorganization.

The firm hopes that it will be able to continue operating under Chapter 11
while it restructures its debt. Although its wireless data service may have
been successful, many companies who still depend on traditional paging for
revenues are learning the hard way that it won’t work because beepers are
have increasingly been phased out now that Web-enabled cell phones, wireless
pagers and personal digital assistants have arrived en masse.

WebLink indicated its troubles on April 1 when it linked arms with rival
Metrocall Inc. to file for Chapter 11 bankruptcy and merge to forge a
wireless data company that would work. Over the course of a year, both
companies shares had plummeted an alarming 98 to 99 percent.

But that merger never transpired; on May 11 MetroCall announced that it had
ended previous combination agreements with WebLink and would begin anew,
citing events that “changed the economics of the transaction.”
Renegotiations did not pan out either.

On May 14 WebLink announced first strong growth in its Wireless Data
Division and continued decline in its Traditional Paging Division. Wireless
Data revenues were up 50 from the prior quarter and consolidated EBITDA
improved $4.9 million over the prior quarter to $1.1 million. WebLink added
123,332 Wireless Data subscribers in Q1 of 2001.

That came after its official de-listing from the NASDAQ on May 3 for failing
to comply with the stock exchange’s minimum bid price and a subsequent
15-percent slashing of its workforce.

As of Thursday, WebLink has received a commitment from some of its principal
noteholders for the provision of $25 million of debtor in possession
financing for operations during the Chapter 11 process with up to another
$20 million to be made available to the company at the discretion of the
noteholders upon a successful reorganization and exit from Chapter 11.

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