MobileMedia Corp. reported a third quarter net loss of $188.1 million and did not meet its scheduled interest payment on its publicly traded bonds. The events prompted a review by Moody’s Investors Service for possible downgrade. Smith Barney Inc. remains lukewarm to positive on the company.
The net loss for the three-month period ended Sept. 30 was equivalent to $3.92 per share. For the same quarter in 1995, pro forma net loss was $163.2 million, or $3.47 per share. Pro forma figures include the operations of MobileComm, acquired in January, and of Dial Page Inc., acquired in August.
On Nov. 1, Moody’s placed MobileMedia’s Caa senior subordinated notes on review for possible downgrade and lowered the company’s senior secured bank facility to B3 from B2, following MobileMedia’s announcement the same day that the company would fail to meet its scheduled interest payment on its 9.38 percent senior subordinated notes. MobileMedia is in discussions with its bank group to amend its credit facility. “If MobileMedia is not successful in negotiating a settlement with its bank group, the company may file for bankruptcy,” said Moody’s.
A week or so prior to MobileMedia’s official release of earnings (and after release of estimated earnings in September), Smith Barney lowered its price target on MobileMedia stock from $28 per share to $8.50 per share-at which time the stock traded around $4-and raised the risk qualifier from High Risk to Speculative. However, Smith Barney maintains its Buy rating and noted, “companies with problems of a similar magnitude have not reflected their appropriate value until the issues were resolved.”
The firm made reference to Jackson, Miss.-based Mobile Telecommunication Technologies Corp., whose stock fell with two-way messaging network troubles. Mtel’s stock rebounded from $9 per share to $15 per share during six months.
Smith Barney said it believes MobileMedia’s most likely option for raising financing would be a $100 million contribution from Hellman & Friedman, the company’s largest shareholder. MobileMedia intends to issue $100 million in high-yield or preferred stock, which is required by the bank syndicate, added the investment firm.
Revenue for MobileMedia, the nation’s second largest paging carrier, was $431 million for the quarter, compared with pro forma and reported revenue figures of $407.2 million and $150.8 million, respectively, for third quarter 1995.
MobileMedia’s earnings before interest, taxes, depreciation and amortization totaled $35.3 million, compared with EBITDA of $16.4 million a year earlier.
Net new subscribers from internal growth were 57,180 for the quarter, of which 23.6 percent were alphanumeric paging users.
