Jim, I finally found that reference to the $3 strike price options - Reference is made only to the Hicks Muse investment however. In bold type below.
Dow Jones...
NEW YORK -- Investments from several companies, including AT&T Corp.'s (T) wireless division, were seen as votes of confidence in paging and wireless company Metrocall Inc. (MCLL) Thursday morning, and its stock more than tripled to a new 52-week high.
Shares of Metrocall were recently trading at 6 1/4, up 4 7/32, or 208%, on volume of 32 million shares, compared with a daily average of 447,000. The stock has reached as high as 6 15/16.
Thursday, Metrocall announced AT&T Wireless will exchange its $105 million in Series C preferred Metrocall stock for 13.25 million common shares.
Metrocall also said three companies - investment firm Hicks Muse Tate & Furst Inc., PSINet Inc. (PSIX), and another unnamed technology company - will make investments that will bring it about $51 million in new capital.
An analyst who declined to be named, citing his firm's involvement in the deals, attributed the stock's runup to the AT&T Wireless stock exchange and the $51 million funding.
The exchange with AT&T values Metrocall common shares at $7.92 a share, far above the Wednesday regular-session close of 2 1/32. The transaction will leave AT&T Wireless with a 19.9% stake in Metrocall.
A Metrocall spokesman said the AT&T exchange, along with the $51 million investment from three other companies, drove its share price up.
AT&T's wireless unit took its stake in Metrocall's Series C preferred stock in October 1998, when Metrocall purchased AT&T Wireless' advanced messaging division.
In a statement, Metrocall Chief Executive William Collins said AT&T Wireless' exchange for common stock "demonstrates a strong belief in the value proposition created by Metrocall's ability to bundle AT&T Wireless products and services in offerings to our customer base utilizing our national distribution capabilities."
Metrocall also said Thursday it bought NationPage from AT&T Wireless for $13 million. However, the Metrocall spokesman said that news had less impact on the stock than the investments.
Shares of fellow paging-services company Aquis Communications Group Inc. (AQIS) soared Thursday in sympathy with the run-up in Metrocall, analysts said. Aquis shares were recently trading at 3 5/8, up 1 1/2, or 70.6%, on volume of 3.9 million shares. Average daily turnover is 380,100.
Despite Metrocall's surge, skepticism remained.
In a Thursday morning research note, ABN AMRO Inc. wrote that while encouraged by the equity investments in Metrocall, "we remain cautious on Metrocall shares." Retaining its hold rating on Metrocall, ABN AMRO cited uncertainty surrounding the two-way messaging market's growth rate and "deteriorating operating fundamentals in the traditional paging market."
One-way paging is losing market share to mobile phones, which are rapidly becoming less expensive.
Metrocall is holding an analyst conference call Thursday afternoon to discuss the new investments.
Hicks Muse Tate & Furst, PSINet and the unnamed technology company will each buy 7.8 million common shares for $17 million, or $2.19 a share, giving each a 9.9% stake in Metrocall.
These investments will reduce Metrocall's total debt "fairly significantly," Chief Executive William Collins said in Thursday afternoon's analyst conference call.
He noted that the $2.19 price is at a premium to Wednesday's closing price of 2 1/32.
Chief Financial Officer Vincent Kelly said Hicks Muse & Furst has two options to purchase additional shares: a 12-month option to invest another $25 million at $3 a share, or a 24-month option, contingent on a consolidation transaction, to invest another $50 million at $4 a share.
AT&T Wireless will have the option of selling 20% of its stake 12 months, 18 months and 24 months after the conversion, Kelly said. After 30 months AT&T will be able to sell the remainder of its stake.
But, he added, "In no way has AT&T informed us they would like to be disposing of the shares in a hurry."
"PSINet had been examining the alternatives in this area," PSINet Chief Operating Officer Harold Wills said in Metrocall's conference call Thursday. "It made sense for us to participate with them," he said, "and to become a partner and shareholder of Metrocall."
Officials at AT&T Wireless couldn't be reached for comment.
-Christine Nuzum, Dow Jones Newswires; 201-938-5172
In a statement, Hicks Muse & Furst partner Michael Levitt said, "The investment reflects our confidence in the long-term potential of the wireless data and messaging sector, and in the outstanding enterprise that Bill Collins and his management team have built. Going forward, we believe that Metrocall is positioned as the premier participant in its market with the strategic, operational and financial resources to capitalize on its significant growth potential."
-By Christine Nuzum, Dow Jones Newswires; 201-938-5172
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