Motient Buys Rare Medium

Motient Corp., a wireless communications provider, has opted to buy Rare Medium, a New York-based i-shop, in order to “help address our funding needs” as well as to add new services. Under the deal, which is subject to shareholder approval, each Rare Medium common share will be exchanged for one-tenth of a share of a new class of Motient preferred stock.

Each whole share of the new preferred stock will have a liquidation preference of $20 and be convertible into 6.4 shares of Motient common stock. Additionally, for Rare Medium’s existing preferred stock, Motient will pay nine million of its XM Satellite Radio shares, plus about $13 million in cash. Also, a previously announced $25 million loan by Rare Medium to Motient will be absorbed by the combined company upon the deal’s close, which is expected in the third quarter.

The new company will retain Motient’s name and homebase in Reston, Va., with additional locations in Chicago, New York, Atlanta, Dallas and California. The combined company is expected to have service revenues of more than $100 million and double the number of employees at 1,000.

Motient president and CEO Walter V. Purnell Jr. said that with the deal, the combined company should be funded well into the first half of 2002 and should reach breakeven cashflow “around the same time frame.”

Meanwhile, Rare Medium reported revenue from its Internet Services business for the first quarter of $10.1 million, while consolidated revenue for the first quarter was $8.6 million. Rare Medium said revenue from the Internet Services business included revenue from consolidated subsidiaries, which is eliminated in the consolidated financial statements. The net loss available to common shareholders was $1.09 per share.