The big question on Wall Street last week seemed to be “What’s up with PageNet?”
After falling steadily all year, Paging Network Inc. enjoyed a stock market rally last week that started Monday and continued through Wednesday, only to fall Thursday on news the company will not be able to make a Feb. 1 debt interest payment of $33.6 million.
The missed payment is expected to affect the company’s pending merger with Arch Communications Group Inc. as the deal is adjusted to reflect the unpaid debt and accrued interest. In addition, PageNet said it expects the missed payment, as well as a continuing decline in its results of operations during the fourth quarter of last year, to violate certain covenants of PageNet’s bank credit facility.
Since mid-September, PageNet stock only occasionally has poked above $1. On Monday, the stock rallied, rising 40 percent the first day and continuing as high as $2.75 on Wednesday, only to close at $1.94 with per-day trading volumes exceeding 44 million. The stock fell Thursday to $1.34 and was trading around $1.38 midday Friday.
Speculation for the rally runs rampant. Rumors that PageNet will be delisted from Nasdaq prevail. The rally may be a last-ditch attempt to save PageNet from delisting, or a chance to buy shares on the cheap before it is delisted to take advantage of the merger proposal’s VAST spinoff equity distribution.
In a Securities and Exchange Commission filing earlier this month, PageNet revealed Nasdaq warned it would delist the company Dec. 22 unless it scheduled an appeal hearing. On Dec. 16, PageNet scheduled such a meeting for Jan. 27. At the meeting, the company said it would request an extension of the time by which it must comply with the minimum listing requirements. One of those requirements is for its stock to trade above $5 for at least 10 days in a row.
“The delisting of PageNet’s stock … may result in PageNet appraisal rights becoming available for PageNet stockholders. This result could add further complications and uncertainty to the merger,” read the filing.
Most stock analysts, however, believe the phenomenon is nothing more than a simple pump and dump, similar to what happened to Aquis Communications Inc. late last month, when the company’s stock skyrocketed from 50 cents to more than $4 before trailing off.
