Davel Communications, Inc. and PhoneTel Technologies, Inc. Sign Definitive Merger Agreement
Companies Execute Amendments To Their Credit Facilities And Secure New $10 Million Credit Facility
TAMPA, Fla., and CLEVELAND, Feb. 21 /PRNewswire-FirstCall/ -- Davel Communications, Inc. (OTC Bulletin Board: DAVL - news), and PhoneTel Technologies, Inc. (OTC Bulletin Board: PHTE - news), the nation's two leading publicly traded independent payphone service providers with a combined installed base of approximately 84,000 payphones, today announced that they have signed a definitive agreement to merge. In the merger, PhoneTel will become a wholly owned subsidiary of Davel. The merger agreement was unanimously approved by the Boards of Directors of both companies and is subject to the approval of the shareholders of both companies.
In connection with the merger, the existing secured lenders of both Davel and PhoneTel have agreed to exchange a substantial amount of debt for equity securities of the respective companies and to restructure the remaining debt. In addition, Davel and PhoneTel announced that they have each executed amendments to their existing credit agreements and have entered into a new combined $10.0 million senior credit facility.
Specifically, Davel has executed a Seventh Amendment to the Credit Agreement and Consent and Waiver from the Lenders of its existing secured debt that extended to August 31, 2002 certain payments due July 15, 2001, October 15, 2001 and January 11, 2002, waived certain defaults and consented to the new senior credit facility and the merger transactions. PhoneTel has executed Amendment Number Eight to its existing credit facility that extended the maturity date to August 31, 2002, provided for the capitalization of monthly interest through August 1, 2002, waived certain defaults and amended or eliminated certain financial covenants. In addition, Davel and PhoneTel entered into a new $10.0 million credit facility with Madeleine L.L.C., and ARK CLO 2000-1, Limited, the proceeds of which will be used to help finance certain operating and transaction-related expenses.
Pursuant to the exchange of debt for equity securities, PhoneTel's existing secured lenders will own 87% of PhoneTel's outstanding common stock immediately prior to the merger, with the remaining senior secured debt not to exceed $36.5 million (compared to approximately $64 million currently outstanding). Existing holders of PhoneTel common stock will own 9% of PhoneTel's outstanding shares, and 4% will be reserved for employee stock options and awards. In connection with Davel's exchange of debt for equity securities, its existing secured lenders will own 93% of Davel's outstanding common stock immediately prior to the merger, with the remaining secured debt not to exceed $63.5 million (compared to approximately $276 million currently outstanding). Existing shareholders of Davel common stock will own 3% of Davel's outstanding shares, and 4% of the common stock will be reserved for the issuance of stock options and awards to Davel employees.
Immediately following the merger, current PhoneTel shareholders will own approximately 3.28% of the shares of Davel common stock, and current Davel shareholders will own approximately 1.91%. Of the remaining shares, 4.00% are intended to be reserved for issuance of employee stock options and awards, and the companies' current lenders will own approximately 90.81%. Cash will be paid in lieu of fractional shares.
Effective with the merger, the then outstanding debt of the existing secured lenders of both entities, (currently $340 million) will be reduced to $100 million in debt of the merged entity through the exchange of debt for equity securities described above.
The transaction is subject to approval by the shareholders of both companies and the receipt of material third party and governmental approvals and consents. In conjunction with the transaction, Davel will also seek shareholder approval to increase the number of authorized shares of common stock from 50,000,000 to 1,000,000,000 and to increase the shares issuable pursuant to Davel's 2000 Long-Term Equity Incentive Plan. No dates have been set for the stockholders' meetings.
Bruce W. Renard, President of Davel, commented, ``We are extremely excited to be able to move forward with this merger, which will produce a much stronger combined entity in what has been a challenging industry environment. Through the Servicing Agreement put in place last summer, we have realized lower field operating costs due to the more efficient concentration of payphone routes and elimination of redundant branch offices. In the near future, there should be additional cost savings, resulting from the elimination of redundant general and administrative expenses when the corporate headquarters operations of Davel and PhoneTel are combined. With an improved financial structure and an expanded market presence, we believe we will be well positioned to take advantage of recent FCC rulings designed to lower telephone costs and improve dial-around compensation collections for payphone providers nationwide.''
John D. Chichester, President and CEO of PhoneTel, added, `` The merger of PhoneTel and Davel creates a sustainable and forceful business with a continued commitment to cost effective management. The combined company will operate under good, solid business principles while exploring innovation in both products and markets. This beneficial merger has been made possible by the continued support of our lender groups, the Boards of Directors for both companies, our vendors and the continued hard work and dedication of the employees of both organizations. All concerned clearly recognize that this combination represents an exciting and highly beneficial opportunity for both companies and a desirable outcome for our customers and stakeholders. Together, we look forward to taking full advantage of the business economies as well as new business opportunities as they emerge in the public communications industry and other related telecommunications sectors.'' |
