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Response to Article on American Mobile System

May 24, 1988

I read with interest the article by Greg Crouch on American Mobile System (Valley Business, April 19).

I am the attorney who represented Richard Somers, William Young and their company, Autotel Communications Network (Autotel) in the transaction whereby AMS acquired the assets of Autotel. I would like to take the opportunity to set the record straight on several points.

First, the article depicts AMS' service as second-rate competition to cellular mobile telephone service. This is not the case. AMS is in the two-way dispatch communications business and offers mobile telephone service as a feature to the dispatch service, enabling its customers to use their two-way radios to place and receive telephone calls in addition to their primary function of communicating directly with the customer's base station.

Second, the vast majority of the losses which were suffered by AMS occurred under former management and prior to the commencement of Mr. Somers' and Mr. Young's involvement with AMS in September, 1987. Further, the facts are that any losses which investors may have suffered also resulted from that prior era and the efforts of that management. Since Mr. Young and Mr. Somers became consultants and, more recently, became officers and directors, AMS, a company which had been in a serious financial situation, has begun its turnaround and, as your article states, expects to begin making an operating profit sometime this year.

Third, your article unfairly characterizes the investment by Mr. Somers and Mr. Young as minimal. Autotel's assets were worth nearly $10 million, and Mr. Somers and Mr. Young (and their partners) took nearly one-half of their purchase price in stock, warrants and notes, making them some of the largest shareholders of AMS.

More importantly, Mr. Crouch's article fails to even mention that AMS' former management quit during the negotiations of the transaction, which left AMS without experienced management and with much greater problems than had been anticipated by any party to the transaction. Rather than backing out of the transaction, which Autotel had a right to do, and which would have left AMS in a difficult situation, Mr. Somers and Mr. Young began consulting with AMS. Those efforts resulted in AMS' saving a large number of frequencies which AMS would have otherwise lost. This was a rather remarkable action in light of the fact that had FCC not given its final approval to the transaction, Autotel would have received only the consulting fees for saving its major competitor and would have lost the opportunity to acquire some of AMS's assets on extremely favorable terms if AMS had been forced to sell them.

Your article has unfairly characterized and disparaged two very honorable businessmen who have invested a significant amount of their money, efforts and prestige in restoring a company in which they had no prior stake. Your article also fails to make mention of the dozens of jobs of they have created in the San Fernando Valley by moving AMS' headquarters to Sherman Oaks.



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