Here's a story by George Garneau from the Oct. 21, 1989 Editor & Publisher:
Infotechnology Inc., has acquired majority ownership of United Press International 19 months after taking control of its management, Infotech reported.
Spokesman Amber Gordon said that in September Infotech "exercised an option" and now owns nearly all the stock in New UPI Inc., the company formed by Mexican publisher Mario Vazquez Rana to buy UPI from bankruptcy in 1986. Under mounting losses, Vazquez in early 1988 turned over management control to an investor group led by Infotech chairman Dr. Earl Brian.
The latest transaction, which took place sometime in September, nearly completes Vazquez's exit from the financially troubled news service he spent $40 million to buy and undisclosed millions to keep afloat.
In an interview, Joseph Taussig, UPI's new vice chairman and head of Infotech's information services group, said Infotech now holds about 99 percent of New UPI, while Vazquez and his minority partner, Texas developer Joe Russo, together retain less than 1 percent.
Taussig did not know if money changed hands in the transaction.
"I've got a straightforward mission to worry about, and those things don't affect it," he said.
Exact terms of the agreement between Vazquez and Infotech have never been made public. Infotech did say it paid Vazquez a "substantial" amount for sweeping management rights.
The deal was transacted through WNW Group Inc., chaired by Brian. It included irrevocable proxy rights to manage UPI and options on its stock.
Brian told reporters at the time that Vazquez remained the majority shareholder and there was "no agreement or understanding to acquire" his interest in UPI. However, he called the deal "another way to own the company, ultimately."
Last March, Infotech traded 1.5 million of its shares, valued at $16 million, for 100 WNW shares, thus taking full ownership of WNW and its main assets: proxy rights to and options on UPI stock.
In Securities and Exchange Commission filings, Infotech listed the cost of the acquisition of WNW stock at $16.4 million, and its fair value at $20.4 million -- an unrealized appreciation of $4 million.
A Dutch-financed investor group, Avacus Partners LP, later sued Infotech in Delaware Chancery Court for allegedly making phony stock transactions designed to thwart its contemplated takeover. Infotech has called the suit baseless.
WNW was dissolved last March and its assets distributed to shareholders, including Infotech, according to its September SEC filing.
Earlier this year, Brian said he was raising capital by selling $15 million of convertible preferred stock -- 100,000 shares -- mostly to European and U.S. institutional investors, whom he declined to name.
Those investors all have converted their shares into Infotech stock, Taussig said.
Brian, who is also chairman of UPI and Financial News Network, could not be reached for comment.
When Vazquez took over UPI, he signed an agreement giving the Wire Service Guild first refusal rights on the sale of the company. Those terms became moot under a subsequent union contract.
A New York-based business development company holding interest in or control of eight information and biotechnology companies, Infotech has stated its intention to become an operating company and, as such, subject to less regulation.
In fiscal 1989 SEC filings, Infotech estimated the fair market value of its investment in UPI at "approximately $30 million compared to a cost basis of approximately $26 million."
Costs included "a management fee of approximately $2 million" relating to the acquisition and management. It listed $5.8 million in "bridge financing" to UPI at 11 percent interest.
Infotech "derives a significant portion" of its operating revenue from management fees and from interest charges from its component companies. Management fees in 1989 rose to $3.2 million, up from $900,000 last fiscal year. Interest rose to $1.1 million, up from $800,000 a year earlier.