Vazquez-Rana Accepts Conditions on UPI Purchase Approval



(This story was filed by UPI reporter Gregory Gordon on Dec. 18, 1985.)


WASHINGTON -- Mexican publisher Mario Vazquez-Rana has consented to terms of a court order granting preliminary approval to his $41 million purchase of United Press International, a move assuring the firm operating cash pending a final sale.

Vazquez-Rana's agreement Tuesday to a bankruptcy judge's restriction against his playing an interim role in UPI management triggered a court order blocking a committee representing UPI creditors from supporting a higher bid from a seven-member business consortium.

Acceptance by Vazquez-Rana paved the way for UPI to receive an immediate cash infusion of $1 million, up to $1.5 million in coming months, and the backing of a $25 million line of credit pending court approval of a formal reorganization plan.

"The real winners in this ruling are the UPI subscribers and employees, whose loyalties have sustained it," Vazquez-Rana and his 10 percent partner, Texas businessman Joe Russo, said of the wire service that has struggled since April 28 through Chapter 11 bankruptcy proceedings.

"We . . . pledge our own commitment not just to maintain the UPI tradition -- but to enhance it.'

While Vazquez-Rana's offer to unsecured creditors was an estimated 20 cents on the dollar less than a recent proposal from the business group led by the Financial News Network Inc., he pledged to pay all past employee claims and to provide up to $30 million in working capital for UPI's turnaround.

Joe Levin, a lawyer for the FNN group that has for weeks challenged the sale plans, said, "It is certainly likely that we will file an appeal" of the court ruling.

John Battiato, a New York lawyer for the creditors' committee, acknowledged that it received a new offer from the FNN group before a court-imposed deadline Tuesday, but declined to say whether it differed from previous offers.

He said the committee would decide Wednesday or Thursday whether to appeal the court ruling requiring the committee to stick with its Nov. 12 endorsement of Vazquez-Rana.

UPI Chairman Luis Nogales said, "The way has now been cleared for the immediate strengthening of UPI and its emergence from Chapter 11 . . . as a well-capitalized, growth-oriented company."

U.S. Bankruptcy Judge George Bason ruled Monday, after three days of hearings on UPI's selection of Vazquez-Rana as the buyer, that bids could be reopened only if the Mexican publisher did not accept a modified purchase agreement by 5 p.m. EST Tuesday.

The judge, who held that Nogales, the Wire Service Guild representing employees, and the creditors were bound by their joint selection of Vazquez-Rana, conditionally permitted interim bids as insurance for UPI.

Vazquez-Rana had threatened at a court hearing Sunday to withdraw his offer if the purchase agreement were not approved intact. But he agreed Tuesday that Nogales could continue complete management control during the expected two to three months before a sale is ratified.

Levin said although Vazquez-Rana had locked out competing bids, the FNN group is "very serious about the entire proposition, and we'll pursue it."

Bason said Monday he would grant UPI a preliminary injunction barring FNN from directly contacting UPI creditors and customers to push its $40 million offer, as it had done after the selection of Vazquez-Rana.

Besides the FNN proposal, sources said the creditors' committee also was contacted Tuesday by representatives of Australian Robert Holmes a Court, who sent executives to Washington. Holmes a Court's Bell Group Ltd., had yet to submit a formal proposal by late afternoon, however.

The judge still must rule whether UPI's chief owners, Douglas Ruhe and William Geissler, who have thrown their support to the FNN group, have the right to submit their plan of reorganization to more than 5,000 unsecured creditors.

Bason has ruled against Ruhe and Geissler, who led a consortium that bought UPI for $1 in 1982, on most matters that have come before the court.

Should Ruhe and Geissler be thwarted again, Vazquez-Rana apparently would have cleared all hurdles except for possible court appeals, an affirmative vote of the creditors and Bason's final stamp of approval.

At least half the voting creditors, and creditors representing at least two thirds of the debts owed, must approve a sale.

The judge still must rule whether UPI's chief owners, Douglas Ruhe and William Geissler, who have thrown their support to the FNN group, have the right to submit their plan of reorganization to more than 5,000 unsecured creditors.

Bason has ruled against Ruhe and Geissler, who led a consortium that bought UPI for $1 in 1982, on most matters that have come before the court.

Should Ruhe and Geissler be thwarted again, Vazquez-Rana apparently would have cleared all hurdles except for possible court appeals, an affirmative vote of the creditors and Bason's final stamp of approval.

At least half the voting creditors, and creditors representing at least two thirds of the debts owed, must approve a sale.

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