Putting behind what it calls “the roller-coaster year of 1994,” specialized mobile radio operator Pittencrieff Communications Inc. intends to strengthen its market presence and its financial situation by merging with Advanced MobileComm Inc. and a number of unrelated SMRs.

PCI entered into a letter of intent to acquire substantially all of the SMR assets and airtime operations of the parties in exchange for issuing 11.4 million newly registered shares of its common stock, subject to adjustment.

The assets are located primarily in Texas and comprise more than 1,000 800 MHz channels including substantial channel positions in the Dallas/Fort Worth, Houston, San Antonio and Austin, Texas markets, PCI said. The deal also includes purchasing 2,000 channels, which must be approved by the Federal Communications Commission, as well as 70 900 MHz channels in San Diego.

“The marriage of AMI’s operations and channel position with those of our own will give the combined group a commanding SMR position in Texas, the second most populous state in the United States and one of the fastest growing,” said Warren D. Harkins, PCI’s chairman, president and chief executive officer.

“The marriage of AMI’s operations and channel position with those of our own will give the combined group a commanding SMR position in Texas.”

A financial relationship with AMI’s owner, Fidelity Capital, can’t hurt either. Fidelity Capital-the venture capital arm of mutual fund powerhouse Fidelity Investments-reported 1994 revenues of $229 million, more than seven times PCI’s 1994 revenues.

Pittencrieff noted a frustrating 1994 as the company broke free from its U.K.-based parent, suffered the torturously bungled implementation of a new management information system, planned for-but ultimately shelved-a $100 million bond issue and saw its stock prices rise, but fall as SMR stocks generally lost favor in the eyes of the Wall Street investment community.

As part of the Advanced MobileComm deal, an affiliate of Fidelity will make available a $20 million credit facility to PCI for working capital, future acquisitions and the initial build-out of PCI’s digital network, the company said.

PCI’s Chief Financial Officer Douglas Sinclair said he expects Fidelity to hold a post-merger equity position of more than 20 percent. The company said it will expand its board of directors from five to eight and nominate three Fidelity representatives for election to the new seats. Fidelity Capital has been active in telecommunications since 1987 and holds equity positions in a number of wireless ventures.

George Hertz, Advanced MobileComm’s president, noted his company began as an active operator of the SMR channels it acquired, but there came a time when it realized that consolidation was necessary to compete. It merged parts of its system in 1993 with Nextel Communications Inc. and Dial Page Inc. in exchange for relatively small slices of equity. The PCI deal merges the last of its SMR assets.

“We’re very excited about the opportunity. (SMR) is and can be a very competitive factor in wireless telecommunications,” Hertz said.

James Hynes, managing director of Fidelity Capital added, “While we recognize PCI’s well-regarded expertise in SMR, we believe that Fidelity will bring substantially more to the deal than channels alone. The synergies created by this deal will ensure that both parties are clear winners.”

The proposed merger is subject to negotiation and execution of a definitive purchase agreement, as well as satisfying various conditions, which include completing due diligence by both parties and being approved by government agencies and PCI shareholders.


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