Comtex Scientific Corp., a joint-venture partner with United Press International, said Wednesday that it is seeking to form an investment group to buy UPI, which is operating under Chapter 11 of the U.S. Bankruptcy Code.
Comtex issued an announcement saying that Uninet, a division of United Telecom, has agreed to provide advanced telecommunications for the group to sharply cut UPI’s operating costs but will not participate as an equity partner.
Comtex, a small, publicly held New York firm that lost money last year, was one of more than 15 parties that responded to UPI’s Monday deadline for “expressions of interest” from would-be bidders.
UPI Chairman Luis Nogales and President Ray Wechsler discussed the process for selecting a new owner Wednesday at a meeting in New York with a committee representing unsecured creditors.
John Ingham, an investment banker hired by Comtex, acknowledged that Comtex lacks the funds to buy UPI by itself but said he is searching for possible equity partners. In a statement announcing interest in acquiring UPI, Comtex said it is “committed to the principle of maintaining the existence of a second, independent source of worldwide news and information.”
Ingham said he and Comtex President Graeme Keeping met in New York on Tuesday with the two top officers of the Wire Service Guild, UPI’s employees union and the union’s newly hired investment adviser, Brian Freeman.
The union, which is helping UPI management screen potential purchasers, has said it hired Freeman to lead its own search for a buyer.
$1.8 Million in Revenue
“It isn’t Comtex’s intention to come riding in and taking something over,” Ingham said. “The deal will be structured where there could be a number of interested parties--the Guild would be part of it” as an equity partner.
Comtex had revenue of $1.8 million for the fiscal year ended March 31, much of it from reselling UPI’s data bank to the electronic publishing industry under a joint-venture agreement with UPI.
Nogales has charged that the joint-venture deal, which gave UPI a 45% stock interest in Comtex, did not benefit UPI.
UPI has taken preliminary steps in federal bankruptcy court toward seeking to void the transaction, made by owners Douglas Ruhe and William Geissler before Nogales took operating control, and to recover exclusive rights to the data bank from Comtex.