Resurgens Agrees to Buy Controlling Interest in Com Systems : Telecommunications: Officials say the acquisition by the Atlanta concern will probably lead to the eventual merger with the Westlake-based long-distance company.
An Atlanta telecommunications company has agreed to purchase a controlling interest in Com Systems Inc., a Westlake long-distance telephone company, from a Swiss concern for $30 million.
Resurgens Communications Group Inc. last week said it agreed in principle to acquire the Com Systems stake from OmniCorp International B.V., the merchant banking and investment arm of Omni Holding AG, a Swiss industrial and financial services concern.
As has been previously reported, Omni Holdings’ highly leveraged operations are in bad shape. Earlier this month the Swiss concern, unable to raise money to cover its short-term debt payments, filed for protection from its creditors. Meanwhile, Omni has been selling various assets to raise cash.
The purchase price for Com Systems includes $17 million for preferred stock that is convertible into 7.83 million shares of Com Systems’ common stock, and $13 million in convertible subordinated debentures, a kind of debt security.
The transaction, which is subject to confirmation by the boards of directors of Resurgens and OmniCorp and other necessary approvals, would give Resurgens a 56% voting interest in Com Systems if its holdings were converted into common stock, said Rex Licklider, Com Systems’ president and founder. Licklider now owns 13% of Com Systems’ stock.
Michael P. Marshall, Resurgens’ chairman, said the Com Systems investment would probably lead to the eventual merger of Com Systems into Resurgens.
Resurgens, with about $45 million in annual revenues, specializes in long-distance service to facilities with multiple telephones, such as hotels and hospitals. It also provides operator and billing and collection services to other companies and sells telecommunications products such as cellular telephones and facsimile machines.
Com Systems’ current management, including Licklider, would remain at the company for the near future, Marshall said. He declined to comment on any long-term changes that might occur at the company.
Com Systems is a tiny competitor in the $60-billion-a-year long-distance telephone market, which is dominated by AT&T;, MCI and US Sprint. The big three companies control about 95% of the long-distance market, but several hundred companies vie for the rest.
Com Systems rents space on various long-distance networks and services primarily corporate customers in California, Arizona and Nevada.
But the company, which was founded by Licklider in 1975, has been plagued by financial problems. OmniCorp invested $7 million in Com Systems in 1989 in exchange for a controlling interest as part of Com Systems’ effort to shore up its weakened finances.
Since then, Com Systems’ financial performance has remained sporadic. In the nine months that ended Sept. 30, the company lost $1.5 million on revenues of $100.5 million and had a negative net worth--its liabilities exceeded its assets by $4.6 million.
