CORPORATE OFFICE
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Office: 312-630-1900
FAX: 000-000-0000
000-000-0000
[LOGO] TELEPHONE AND
DATA SYSTEMS, INC.
December 23, 1997
To the Board of Directors
of American Paging, Inc.
Ladies and Gentlemen:
As you know, the Board of Directors of Telephone and Data Systems,
Inc. ("TDS") has approved an Asset Contribution Agreement, dated December 22,
1997 (the "Asset Contribution Agreement"), among TDS, TSR Paging Inc. ("TSR")
and TSR Wireless LLC, a Delaware limited liability company ("TSR Wireless").
In accordance with the terms and conditions of the Asset Contribution
Agreement, TDS has proposed to negotiate and enter into a merger agreement
with American Paging, Inc., pursuant to which a wholly owned subsidiary of
TDS would acquire all of the issued and outstanding Common Shares of API not
owned by TDS for cash in an amount equal to $2.25 per share. Under the terms
of the Asset Contribution Agreement, TDS is not required to complete a merger
which does not have the recommendation of a special committee of independent
directors of API. Upon consummation of the merger as contemplated by such
merger agreement, in accordance with the terms and conditions of the Asset
Contribution Agreement, TDS and TSR would combine their respective paging
businesses, and TDS would contribute substantially all of the assets and
certain, limited liabilities of API, and TSR would contribute all of its
assets and liabilities into TSR Wireless. TSR Wireless would not assume
approximately $170 million of debt owed by API to TDS. TDS would have a 30%
interest and TSR would have a 70% interest in TSR Wireless, subject to
certain adjustments. In addition, concurrently with the execution and
delivery of the Asset Contribution Agreement, TDS and TSR Wireless executed
and delivered an option agreement (the "Option Agreement"), pursuant to which
TDS granted TSR Wireless an option to acquire under certain circumstances
debt owed by API to TDS.
TDS hereby offers to enter into a merger agreement with API
pursuant to which a subsidiary of TDS will acquire all of the issued and
outstanding Common Shares not owned by TDS for cash in an amount equal to
$2.25 per share. The merger would, of course, be subject to various
conditions including the approval of the Board of
Directors of TDS and the approval of the independent directors of API, as
described below, as well as approval by the Board of Directors of API.
We assume that the independent directors will constitute a special
committee to consider this offer and that such special committee will retain
its own financial and legal advisors to assist in its deliberations.
We look forward to working on this transaction with your designated
representatives. A copy of the Asset Contribution Agreement and the Option
Agreement are being made available to the Board of Directors of API and
representatives of TDS who are familiar with the transaction, including its
counsel, Xxxxxx & Austin, will be happy to answer any questions you might
have about these agreements. We reserve the right to amend or withdraw this
proposal at any time.
Very truly yours,
/s/ Xxxxx X. Xxxxxxxxxx
Enclosure
