'Who Has Right to Buy UPI?'



Here's a story by George Garneau from the April 16, 1988, edition of Editor & Publisher:

NEW MANAGEMENT SAYS GUILD NO LONGER HAS RIGHT

The chairman of United Press International said the Wire Service Guild has no right of first refusal to buy the wire service.

Dr. Earl Brian, chairman of WNW Group Inc., which manages UPI, said rights granted by principal owner Mario Vazquez Rana to the Guild in a 1986 agreement supporting his takeover were limited to Vazquez' firm, New UPI Inc.

An employee stock ownership plan (ESOP) was to have been established by UPI and the Guild to acquire shares of UPI and New UPI stock. The plan's managers would be named by the union, according to the definitive agreement.

The agreement gives the Guild a 10-year right of first refusal to buy UPI stock from New UPI.

However, Vazquez, suffering continuing losses, in February reportedly sold for an undisclosed sum to WNW an irrevocable proxy to manage the company for 10 years.

"They don't have a right of first refusal on UPI," Brian said of the Wire Service Guild. "The ESOP has rights of first refusal on New UPI stock, not UPI stock."

According to Guild spokesman Dan Carmichael, "That is corporate mumbojumbo and it would be interesting to hear Earl Brian tell that to a judge."

Carmichael said the "purpose and intent" of the definite agreement were "crystal clear, and Earl Brian is not a party to it. The union is."

Brian, asked, after a press conference announcing the company's new business plan, why UPI has been trying in negotiations to get the union to relinquish its contractual purchase rights, said the company "just wanted to get all the issues settled at once."

"We'd love to settle with the union," Brian said, "but we're going to move ahead with or without them."

The Guild since November has been working under terms imposed by Vazquez. It has contested the work rules administratively and has been negotiating for a contract.

Brian has said WNW plans to seek recapitalization of UPI through sale of stock. The defensive agreement between the Guild and Vazquez would not prohibit the sale of new stock to investors, Brian said.

Carmichael said the Guild vowed to go to court in an attempt to examine the agreement by which WNW acquired proxy rights to Vazquez' 95 percent share of New UPI in order to check whether it violates the definitive agreement on sale of the company.

Union officials have suggested the transfer of management was structured to avoid the Guild's purchase rights.

"We will get that agreement," he said, noting Guild efforts and "protracted" negotiations over terms under which WNW would turn over the documents.

Carmichael said WNW has "insisted on extremely restrictive terms that would prevent us from discussing it with our members, and if it leaks from any source, we would have to pay them $100,000 in liquidated damages."

He said the Guild was willing to accept "reasonable confidentiality," but it would not be held to keeping information from members or accepting liability for leaks from elsewhere.

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