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Filed by Arch Wireless, Inc.
Pursuant to Rule 425
Subject Companies: Arch Wireless, Inc.
Arch Transition Corp.
Arch Wireless Communications, Inc.
Arch Wireless Holdings, Inc.
Registration Statement File Nos.: 333-61434
333-61434-01
333-61434-02
333-61434-03
NEWS RELEASE
FOR IMMEDIATE RELEASE CONTACTS: Bob Lougee 508-870-6771
Wednesday, May 23, 2001 Chet Lasell 508-870-6617
ARCH FILES REGISTRATION STATEMENT RELATED TO NOTE EXCHANGE OFFER
PROPOSED EXCHANGES WILL REDUCE DEBT AND INCREASE LIQUIDITY,
ENHANCE OPPORTUNITIES FOR LONG-TERM GROWTH
PROPOSED BANK AMENDMENT WILL REDUCE INTEREST EXPENSE AND DEFER SCHEDULED
PAYMENTS
Westborough, MA (May 23, 2001) - Arch Wireless, Inc. (OTCBB:ARCH), one of the
leading wireless Internet messaging and mobile information providers in the
United States, today announced that it has filed a registration statement with
the Securities and Exchange Commission (SEC) relating to a proposed exchange of
two new issues of senior notes, new units of preferred stock and shares of
common stock for approximately $608 million of principal or accreted value of
its outstanding senior discount notes and the outstanding senior notes issued by
Arch and its wholly owned subsidiary, Arch Wireless Communications, Inc. (AWCI).
Under terms of the proposed offer, for the outstanding principal and accreted
value of all four issues of senior notes issued by AWCI and the senior discount
notes issued by Arch, as well as accrued interest on all of these issues through
June 30, 2001, Arch and its subsidiaries will exchange: (1) a new issue of 12%
unsecured senior notes due 2007 in the amount of $204.6 million; (2) a new issue
of variable rate secured senior notes in the amount of $60 million; (3) shares
of new units of exchangeable and voting preferred stock with an aggregate
liquidation preference of $333.8 million that are exchangeable for Arch common
stock; and (4) an additional 16,634,483 shares of Arch common stock that,
together
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with the new preferred stock, would represent approximately 50% of the voting
power of Arch following the exchange.
As of May 1, 2001, the aggregate principal or accreted value outstanding on
these issues was $607.8 million. If the proposed exchange is effected, the
aggregate principal and accreted value of debt securities would be reduced by
approximately $343.2 million and annual cash interest payments would be reduced
by approximately $67.6 million from September 2001 through September 2004 and by
$9.1 million thereafter.
Arch Transition Corp., a new intermediate holding company wholly owned by Arch,
will be the issuer of the 12% senior notes due 2007 and the exchangeable
preferred stock. Arch Wireless Holdings, Inc., the operating company wholly
owned by Arch, will be the issuer of the variable rate senior notes. Following
the proposed exchange, AWCI will be merged into Arch Wireless, Inc. and Arch
Transition Corp. will be renamed Arch Wireless Communications, Inc.
Arch also announced that it was seeking an amendment to its current bank
facility that would defer the scheduled amortization of approximately $314
million for the period 2002 through 2005, reduce interest rates and provide less
restrictive financial covenants.
C. Edward Baker, Jr., chairman and chief executive officer, said: "This proposed
exchange offer and bank amendment are essential components of Arch's ongoing
strategy to reduce long-term debt and better align our capital structure with
new growth opportunities in the emerging market for two-way wireless messaging
and mobile information. We believe a successful exchange of our publicly traded
debt, coupled with favorable adjustments to our bank facility, will provide an
appropriate level of working capital to operate our business going forward as
well as allow us to more aggressively execute our business plan."
J. Roy Pottle, executive vice president and chief financial officer, said: "The
exchange offer, which upon closing would be both de-leveraging to the company
and accretive to shareholders, is part of our ongoing effort to reduce Arch's
leverage ratio, or net debt divided by annualized EBITDA (Earnings
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Before Interest, Taxes, Depreciation and Amortization), which already is among
the best in the wireless messaging industry."
Pottle said Arch has eliminated or repaid more than $550 million of debt and
over $60 million of annual interest since June 1999. In addition, the company
generated free cash flow in the first quarter and has prepaid all 2001
amortization payments under Arch's current bank credit facility.
As of May 1, 2001, there was outstanding $113.1 million in principal amount of
10 7/8% senior discount notes issued by Arch, $125 million in aggregate
principal amount of 9 1/2% senior notes, $100 million in aggregate principal
amount of 14% senior notes, $128.3 million in aggregate accreted amount of
12 3/4% senior notes, and $141.4 million in aggregate accreted amount of
13 3/4% senior notes each issued by AWCI.
Arch also will be soliciting consents from the holders of its and AWCI's senior
notes to a plan of reorganization that would effectuate the debt exchange
through an alternative restructuring plan. Arch will be soliciting these
consents from its bank lenders separately. Such a plan, requiring fewer
consents, would be contemplated if the required level of participation in the
registered exchange offer or in the separate amendment process to the bank
facility is not obtained but sufficient consents are received to approve the
alternative plan.
The exchange offer requires, at a minimum, a majority in principal amount or
accreted value of each of the five series of outstanding notes and at least 85%
by principal amount or accreted value of all five series combined being
tendered. The amendment to the bank facility requires the consent of all the
bank lenders.
"We believe our note holders and banks will support the exchange initiative and
proposed amendments not only because they will provide the company with enhanced
financial flexibility," Baker said, "but because they will allow us to more
fully execute our business plan and unlock the potential value of wireless
messaging and data services."
ABOUT ARCH WIRELESS
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Arch Wireless, Inc., headquartered in Westborough, Mass., is a leading two-way
wireless Internet messaging and mobile information company with operations
throughout the United States. The company offers a full range of wireless
services to both business and retail customers, including wireless e-mail,
two-way wireless messaging and mobile data, and paging through five regional
divisions. Arch's Business Solutions Group designs wireless enterprise solutions
for companies nationwide, while the National Retail Group distributes Arch
products and services through leading U.S. retailers. Arch provides wireless
services to customers in all 50 states, the District of Columbia, Puerto Rico,
Canada, Mexico and in the Caribbean. Additional information on Arch Wireless is
available on the Internet at www.arch.com.
Arch and AWCI have filed a Registration Statement on SEC Form S-4 in connection
with the exchange offer containing information about the exchange offer and
related transactions. Investors and security holders are urged to read the
Registration Statement and the prospectus therein carefully, as they contain
important information about Arch, its subsidiaries, the exchange offer and
related matters. Investors and security holders can obtain free copies of these
documents through the web site maintained by the U.S. Securities and Exchange
Commission at http//www.sec.gov. In addition to the Registration Statement and
the prospectus, Arch and AWCI file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any reports, statements and other information filed by
them at the SEC public reference rooms at 450 Fifth Street, N.W., Washington,
D.C. 20549 or at the Commission's other public reference rooms in New York, New
York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for
further information on public reference rooms. Arch's and AWCI's filings with
the Commission also are available to the public from commercial
document-retrieval services and at the web site maintained by the Commission at
http//www.sec.gov.
Statement under the Private Securities Litigation Reform Act: Statements
contained herein which are not historical fact, such as statements regarding
anticipated growth in demand for Arch's advanced two-way messaging services, the
ability of Arch to achieve its business plan, the anticipated benefits of the
proposed exchange offer and bank amendments and the expected support of Arch's
note holders and bank lenders for the proposed exchange offer and bank
amendments, are forward-looking statements for purposes of the safe harbor
provisions under the Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve risks and uncertainties that may cause Arch's
actual results to be materially different from the future results expressed or
implied by such forward-looking statements. Factors that could cause actual
results to differ materially from those expectations include, but are not
limited to, risks and uncertainties associated with the proposed exchange offer
and bank amendments, future capital needs, unforeseen delays or difficulties in
launching Arch's additional two-way messaging products and services, competitive
pricing pressures, competition from both traditional paging services and other
wireless communications services, declining demand for traditional paging
products and services, government regulation, reliance upon third party
providers for certain equipment and services, as well as other risks described
from time to time in Arch's periodic reports and registration statements filed
with the Securities and Exchange Commission. Although Arch believes the
expectations reflected in the forward-looking statements are based on reasonable
assumptions, it can give no assurance that its expectations will be attained.
Arch disclaims any intent or obligation to update any forward-looking
statements.
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