Here is an early 1985 (exact date uncertain) New York Times story (written by Alex Jones) on Luis Nogales' success in staving off bankruptcy at UPI -- at least temporarily.
After chipping in for champagne and hanging streamers in a conference room at United Press International's Washington headquarters, many staff members gathered late Monday afternoon to toast Luis Nogales, the news agency's chairman, president, chief executive officer and, the staffers hope, savior.
Mr. Nogales was a prime architect of an agreement reached last week among the agency's owners, chief creditors, union and management that averted what some staff members feared was immiment bankruptcy.
But U.P.I has been reprieved, not saved, as both Mr. Nogales and his many admirers on the staff realize.
"I don't know of anyone who thinks U.P.I. is out of the woods by a long shot, but there is a lot of faith that if anyone can bring us through it, he is is," said Arnold Sawislak, a senior editor and 35-year employee with the news agency.
Under the new agreement, U.P.I.'s owners have made most of their stock available to be traded by vendors in exchange for forgiveness of debts reported to be about $12 million. Removing much of its debt would allow U.P.I. to borrow more money for investment in upgraded and new services and would also make it more appealing to a potential investor.
But no one yet knows whether the vendors are willing to make such a trade, because negotiations have not yet formally begun and vendors will not comment on what they will do.
Though Mr. Nogales is resolutely optimistic, he concedes that he may be facing a difficult series of negotiations, and that U.P.I.'s future depends largely on how many vendors will accept equity positions in exchange for debt. If few will do so, financial analysts give the news agency little change to survive.
"It's absolutely true that the more debt the vendors are willing to convert, the better off we'll be," said Mr. Nogales. "It's gotten down to putting up, and I think a lot of people are going to put up."
According to a spot check of some of U.P.I.'s 800 newspaper and 3,500 broadcast clients, support for U.P.I. remains strong. Last week's crisis did not prompt an unusual flurry of inquiries at its main competitor, The Associated Press, from U.P.I. clients fearful of being left without news, according to an A.P. spokesman.
"I think it's critically important that U.P.I. survive or we'll be left with a monolithic, noncompetitive system without two general news services competing against each other," said Lou Adler, vice president of WOR Radio in New York, who is chairman of the U.P.I. Broadcast Advisory Board. "Maybe this coup is the final answer to the survival of U.P.I., but they we've said that before."
For many clients, U.P.I.'s upheavals in recent months prompted fears that the quality of the agency's report would be damaged, and U.P.I. has lost some of its better staff members and large clients in the last year. But some editors who have closely monitored the report in recent months say the quality has not suffered.
"I see nothing in the news report that would give me reason not to continue to use U.P.I.," said David Lawrence, publisher of The Detroit Free Press.
The sense that U.P.I. may now have a better chance for survival than ever before is based largely on confidence in Mr. Nogales' leadership and the willingness by Douglass Ruhe and William Geissler, who own about 90 percent of U.P.I., to give up control of the company.
In 1982, Mr. Ruhe and Mr. Geissler acquired U.P.I. from the E.W. Scripps Company in a transaction that was essentially a giveaway. They got the company debt-free, but U.P.I., because of stiff competition with The Associated Press and steep operating costs, had been unprofitable for years and quickly ran up new deficits.
In September 1984, the owners installed Mr. Nogales as president and gave him two objectives: operate U.P.I. profitably and find new capital. The owners hoped to attract investors willing to buy minority ownership.
To make U.P.I. profitable, its staff agreed to take deep temporary salary cuts, credit cards were confiscated, travel expenses slashed and the news service was operated on a very tight budget. According to documents released in January, U.P.I. had its first operating profit in over 20 years in the last three months of 1984.
But despite the show of profitability, Mr. Nogales found that new capital was not available unless control of the company was changed, according to senior U.P.I. officials who asked not to be identified. The company's primary creditors did not have confidence in the ability of Mr. Ruhe and Mr. Geissler to operate the company. It was hoped that, with a change of control and continued profitability, the vendors would be willing to invest through trading their outstanding debt for equity.
But it is a theory yet to be proved, and many thorny questions remain.
Though the vendors may be willing to trade debt for equity, there is no way to know lhow much they will value the company and how much they will demand in exchange for indebtedness. As a communications system with little in hard assets beyond desks and computer equipment, U.P.I.'s value, which will be the basis for making trades, is subject to debate, and vendors may seek large chunks of the company in exchange for their debts. If they demand too much, the negotiations could collapse.
Vendors may also resist assuming a proportional liability for severance obligations that some newspaper analysts estimate would be more than $10 million if U.P.I. should go out of business.
Also, the continue profitability that vendors will demand may require new salary cuts and constraints on operating expenses that are likely to prove to be very unpopular iwth both staff and clients.
But Mr. Nogales argues that the vendors would be preserving a good customer and that a U.P.I. without debt would be very valuable and a good investment.
And Mr. Nogales says that vendors are unlikely to seek liquidation of the company because the assets are pledged to the Foothill Financial Corporation of Los Angeles, which has provided U.P.I.'s operating funds.