Toronto-Dominion Bank and Bank of Boston Corp. have extended into next week the deadline for commitments to their $350 million loan for Metrocall Inc., an Alexandria, Va.-based paging company.
The syndication period, which was scheduled to close on Wednesday, is being extended at a time when liquidity in the bank loan market is at record levels, suggesting that bankers are cooling to the paging sector. Competition from new wireless communications companies has bankers concerned about the future of paging.
Their fears intensified early last month when another paging company, MobileMedia Corp., violated terms of its $750 million loan. The company defaulted on interest payments on its bonds, prompting a rating downgrade.
The relatively small Metrocall loan was the first paging deal to come to the market since MobileMedia's troubles. The loan will fund Metrocall's stock acquisition of A+ Network Inc. for approximately $341 million in cash.
A Bank of Boston spokeswoman confirmed Thursday that the commitment date on the deal had been pushed back.
The delay "concerns me only if it has a bad impact on the borrower and its name," said Robert Healy, head of syndication at First Union Corp. "There's been a lot of deals that haven't been completed on time. They ultimately get done."
Charlotte-based First Union is one of at least three co-agents who have committed approximately $40 million apiece to the Metrocall deal. Fleet Financial Group and Royal Bank of Canada are the two others known to be in on the deal.
Toronto-Dominion also minimized the importance of the change. "It's not uncommon to push back the deadline. It's a busy time of year," said one Toronto-Dominon banker close to the deal.
Meanwhile, MobileMedia continues to negotiate with its lead bank, Chase Manhattan Corp., and a steering committee to restructure its loan. Observers point out the company is very different from Metrocall, which last month successfully sold $40 million through a private placement.
Still, paging companies face an uphill battle for financing as banks pour billions of dollars into wireless companies like Nextel Corp. and Sprint Spectrum. That leaves little room in their portfolios for competing paging concerns.
But some observers are bullish."Most paging companies will survive and have a niche," said Jeanine Oburchay, a paging-industry analyst at Bear, Stearns & Co. "Paging won't disappear by any stretch of the imagination."