Ailing UPI Lets Group’s Rescue Offer Expire
United Press International allowed a purchase offer from an unnamed investor group to expire Monday, leaving the financially troubled wire service without a bid on the table to rescue it from bankruptcy.
The news agency, which is trying to reorganize under Chapter 11 of the U.S. Bankruptcy Code, let the offer expire because it thought it lacked sufficient time to consider the bid and wanted time to seek others.
UPI Chairman Luis Nogales also implied that the offer, which would have paid off up to $17.5 million of the company’s debts, was lower than he thought necessary.
David Rubenstein, an attorney representing the investor group, said his clients were “disappointed” that UPI “didn’t take the offer more seriously. . . . If they can get a better offer, they can take it, but I doubt they can.”
He said his investors “remain interested in UPI, but at this point we are not in a position to say what we’ll do in the future.”
Future in Doubt
Monday’s events leave in doubt the future of the 78-year-old news agency, which filed for bankruptcy last April after the Internal Revenue Service began moving to seize its revenue and its primary lender cut off its revolving line of credit.
UPI spokesman David Wickendon said Monday that Nogales “expects there will possibly be another one or two bids for UPI within a week or two.”
However, the news agency has sought investors or a buyer for nearly a year without success. Published rumors that Times Mirror Co., publisher of the Los Angeles Times, was interested are untrue, Times Mirror has said categorically.
The offer that expired Monday would have paid no money to UPI’s current owners, who publicly criticized it. Instead, it would have paid anywhere from $14.5 million to $17.5 million to UPI’s creditors, giving $4 million to $8 million to secured creditors, $3.3 million for back taxes and $5.1 million, or roughly 18 cents on the dollar, to unsecured creditors. The investors group insisted on an answer within two weeks.
Wanted More Time
UPI’s creditors committee allowed that deadline to expire, the wire service said, because the committee “didn’t feel it had enough to adequately consider the proposal within that time frame.” The committee had picked an investment banking team to aid in the sale of the news agency only last week.
The creditors apparently had asked the investors group to extend the offer, but Rubenstein said the investors declined because they didn’t want to tie up their money indefinitely nor have their offer used as a bargaining chip with other suitors.
In a speech before the Virginia Press Assn. last Saturday, Nogales also suggested that the price was too low. He described the investor group’s bid as being for $14 million and added: “I believe it will take $18 million to invest in UPI.”
Also Monday, UPI announced that it had signed a letter of intent with Bonneville Telecommunications in which Bonneville would develop a new transmission system that would save the wire service about $3 million a year.
The deal, however, is contingent on UPI resolving its Chapter 11 bankruptcy proceedings “in a manner satisfactory” to Bonneville, as well as the two parties working out a contract and Bonneville getting financing.
