Arch Wireless bank lenders to receive 91.1% of new notes and cash, most stock in reorganization

New York, Jan. 16 - Arch Wireless, Inc.'s bank creditors will receive 91.1% of both series of new notes to be issued by the company in its restructuring, 91.1% of the cash and the overwhelming majority of its stock, according to the reorganization plan filed with the Securities and Exchange Commission Wednesday.

The plan implements the previously announced restructuring agreement with a majority of the secured creditors of the Westborough, Mass. wireless messaging company, which is currently going through Chapter 11 proceedings in the United States Bankruptcy Court, District of Massachusetts, Western Division.

Under the proposal, Arch Wireless, Inc. will issue new common stock and its operating unit Arch Wireless Holdings, Inc. will issue $200 million principal amount of 10% senior secured notes due 2007 and $100 million principal amount of 12% senior subordinated secured pay in kind notes due 2009 in exchange for all the existing debt and equity.

There will also be a cash distribution of Arch's available cash balances less administrative expenses and costs during bankruptcy. The distribution will be further reduced by the difference between $45 million and the company's exit credit facility.

The various creditors will receive the following in the reorganization:

--Secured claims from bank lenders: to receive $182.2 million of the new 10% senior secured notes, $91.1 million of the new subordinated secured PIK notes, 91.1% of the cash distribution, 13,786,252 shares of the reorganized company's common stock, and 91.1% of the additional stock to ensure all secured claims have in total 92% of the new stock;

--Secured claims from holders of Arch Wireless Communications, Inc.'s 9½% senior notes due 2004 and 14% senior notes due 2004: to receive $17.8 million of the new 10% senior secured notes, $8.9 million of the new subordinated secured PIK notes, 8.9% of the cash distribution, 1,346,846 shares of the reorganized company's common stock, and 8.9% of the additional stock to ensure all secured claims have in total 92% of the new stock;

--Unsecured claims against Arch Wireless Holdings, including unsecured bank and unsecured claims from holders of the 9½% and 14% notes: to receive 3.6 million shares of the reorganized company's common stock;

-- Unsecured claims against Arch Wireless Communications, including unsecured bank claims and unsecured claims from holders of the 9½% and 14% notes and 12¾% senior notes due 2007 and 13¾% senior notes due 2008: to receive 66,902 shares of the reorganized company's common stock;

--Holders of Arch's series F cumulative redeemable preferred stock receive nothing;

--Holders of Arch's series C convertible preferred stock receive nothing;

--Holders of the Arch's old stock will receive nothing.

The plan also envisages Arch obtaining exit financing in the form of a new revolving credit facility of up to $35 million.

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