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Arch Wireless files prepackaged Chapter 11
New York, Dec. 6 - Arch Wireless, Inc. said it made a prepackaged Chapter 11 bankruptcy filing based on an agreement reached with the majority of its secured creditors to restructure the company's debt.
The filing in the U.S. Bankruptcy Court for the District of Massachusetts, Western Division covers Arch Wireless, Inc. and some of its subsidiaries, namely Arch Wireless Communications, Inc., an intermediate holding company, and the operating subsidiary, Arch Wireless Holdings, Inc.
Under the terms of the agreement, Arch Wireless will issue equity and its operating subsidiary 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 PIK notes due 2009 in exchange for all the company's existing debt and equity securities.
Arch said it has a commitment for $50 million of debtor-in-possession financing from a group of banks led by TD Securities (USA), Inc. The company also has $50 million of cash, giving it a total of $100 million of liquidity.
Arch's Chapter 11 filing follows an involuntary Chapter 11 case begun by some holders of Arch Wireless Communications, Inc.'s 12¾% senior notes on Nov. 9.
Explaining Arch's action, C. Edward Baker, Jr., chairman and chief executive officer of the Westborough, Mass. mobile messaging company, said: "The filing will afford us court protection as we seek the court's confirmation of our reorganization plan. In time we expect to emerge as a financially sound and stable operating entity and continue to pursue opportunities in the growing market for two-way messaging and wireless mobile data."
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