United Press International formed a committee of key creditors Thursday in its effort to restructure the company and wipe out most of its reported $17-million debt.
UPI Chairman Luis Nogales called the meeting "extremely constructive" and described creditors as "very positive, upbeat" about cooperating in proposals to forgive debts in return for equity in the company or other considerations.
"This is a committee with whom the company will discuss policy of restructuring, and it will make recommendations to other creditors," Nogales said.
He declined to identify creditors on the committee. The committee was expected to meet again within two weeks.
The committee was formed during a meeting of several dozen creditors. The top 100 creditors had been invited to discuss the debts and to meet UPI's new management team following a shake-up last week.
Nogales said that a major UPI lender, Foothill Capital Corp. of Los Angeles, "fully intends to finance operations (of UPI) during the period of negotiation and restructuring."
Boston attorney Richard Levine, who also represented UPI during the meetings, likened the talks to making an "arrangement with creditors out of court."
He said some creditors have court-approved judgments against UPI, but "there isn't a single case of anybody pressing their demands."
Nogales said that one proposal being considered by the company would offer creditors a share of ownership in exchange for forgiveness of debts. Nogales called that "one of several avenues" that the company is considering, but he declined to elaborate on that or any other proposal, calling the negotiating process "too fluid."
Nogales and other executives have declared that, relieved of heavy debt payments, UPI can operate profitably.
Together With Creditors
Bill Adler, UPI's vice president of information services, said the two-hour private meeting, attended by 40 to 50 creditors, marked the first time that the whole new UPI leadership and financial team was "together with its creditors in the same room."
During the meeting, creditors were given an opportunity to question UPI's new management team, including Nogales, Editor in Chief Maxwell McCrohon, financial consultant Ray Wechsler and union chief William Morrissey.
Nogales said management "is developing a business plan on which we are going to run the company."
UPI announced a restructuring of its ownership last week, as well as a plan to offer major creditors shares of the company in exchange for forgiveness of the bulk of its debts. At the same time, Nogales was given the title of chairman and chief executive, and a new board of directors was named.
In Washington on Wednesday, the Wire Service Guild said it had rejected a proposal by UPI for an 18-month wage freeze and other employee concessions.