Paging Network Inc. has lined up as much as $500 million in bank financing, part of which is expected to fund an acquisition, sources said.

PageNet, based in Plano, Tex., is the nation's largest provider of paging services.

The company is said to be close to reaching agreement on the purchase of the paging operations of a larger communications company. A PageNet spokeswoman declined to comment on the bank financing or any acquisition plans.

Competition from Bell

The identity of the seller could not be learned, but some of the regional Bell companies are said to be unenthusiastic about their continued participation in the paging business and might be interested in selling their paging units.

The Baby Bells are PageNet's biggest competition.

In addition to providing a source of funding for the acquisition, the loan would also be used, at least in part, to replace or refinance a revolving bank credit obtained just this past spring.

The size of that credit was about $200 million.

Members of the existing bank group are: Toronto-Dominion Bank, NationsBank Texas, First National Bank of Boston, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Bank of Hawaii, and Pittsburgh National Bank.

Growing Fast

At least some of these banks are believed to be involved in the new credit, which would be priced at least 200 basis points over the London interbank offered-rate.

In a recent research report, Prudential Securities analyst John Bauer described Paging Network as the largest and fastest-growing paging company in the country. That growth has been achieved largely through the company's ability to keep overhead down and undercut the competition on price.

PageNet has nearly two million subscribers, compared with about one million each at some of the regional Bell companies.

Moreover, PageNet continues to add subscribers at a much faster clip than the Baby Bells.

That growth is expected to continue as PageNet's marketing focus shifts from strictly business customers to the broad consumer market.

Smaller and Less Costly

Technological advances and mass production have made beepers smaller and cheaper.

Earlier this fall, PageNet completed an initial public offering of six million common share at $18 apiece. The company also sold $200 million of senior subordinated notes, which were rated B-Minus by Standard & Poor's Corp. The rating reflected significant business risk and the "expectation of aggressive debt-financed expansion," S&P said, when it rated the debt.

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