Pieter VanBennekom's 1990 Q&A (Boston)

Here's a Nov. 9, 1990, message reporting the results of a presentation by UPI executive Pieter VanBennekom to the Boston bureau staff:

  pieter vanbennekom met with a very pessimistic boston bureau
today and responded to the following issues -- including one regarding
the all-inclusiveness of the paycut.
  it has been confirmed that at least two people in upi management have
been transferred to infotech payroll and will not face the 35 percent paycut. 
one is personnel director anne kott. van bennekom said kott continues
to do the same work for upi but is also doing "other work" for infotech. he
did not name the other person.
  there also are several staffers in foreign countries who will not face the
paycut because, based on laws there, it would amount to a layoff and upi
would be liable for severance. so nothing is saved.
  he said he had taken the paycut and called it "a financial disaster for me
as well." because his standard of living is so much higher and his financial
obligations, thusly, are higher (poor guy). he said earl brian is not and has
never been on upi's payroll.
  of management on the ninth floor, van bennekom said, "it's like a ghost
town up there. there is a very small management staff. some are working
for zero salary, some are working for 65 percent salary.
  "if you think that being transferred to fnn payroll is going to be some
kind of safe haven . . . stay tuned. there will be major cost cutting to all
infotech companies."
  he defined "blue chip companies" as: immediately recognizable, solid track
record. asked which scenario was more likely -- selling uupi as a whole or
in pieces -- he reiterated hirschfield's claim a couple of days ago that there's
better than 50-50 chance upi will be sold in whole.
  despite statements the company is losing $2.5 million a month, van
bennekom said the paycuts will help a great deal. he also said that in the
event of a sale, he would "express the strongest possible personal opinion
that anyone who wants to run with upi has to at the first possibility
address salary issue again. (in other words, give us back the 35 percent.)
he said he could not, however, put that in writing.
  van bennekom also described two major liabilities the company will face
in the event of a shutdown:
  -- the pension fund for management employees is underfunded. "you have
a certain number of years, you have time to make it up."
  -- accounts payable has several liability items.
  he declined to give dollar amounts on either of these.
  he did say that the staff's retirement pension fund is not a factor in any
of this and cannot be raided.
  finally, van bennekom denies any "cooking of the books" and says he is
not seeking personal gain in all of this. he says he's sole member of upi
board of directors and he would be held personally liable for any
commitments he made. "and i can't afford a lawyer."
upi  11-09-90 11:41 aes

209m unipressers: i rode with pieter van bennekom to the airport after his talk to our boston staff. the foloing is all according to pvg, regds, flynn-bh upi cannot long continue to operate as an independent entity no matter what, but a 35 percent pay-cut for guild members will allow upi to become "cash-flow neutral" for a few months while infotech seeks a buyer. such a buyer could only be one with a strategic match, such as someone who can profitably put the information we process into some other form. he resisted requests for a better description of a possibly buyer, saying that would scare off interested parties. even with the wage give-back, however, "upi can work at that level not for too much longer." as for the "two als" who have been brought in to run info tech, pvb said: "they want to do a quick in and out land sell off the pieces." pvb said 90 days might be enough to get a letter of intent from a possible buyer. "at the moment we are trying to sell upi as it is presently constituted," he said. however, "it is also possible that several discrete lines of business will be attractive . . . which will be preferable to a total shutdown. currently, upi and all infotechnology operations, including fnn, are losing money on a cash-flow basis. fnn had expectations "pretty close to breakeven, from what i heard" but revenue fell $14 million short of those targets this year because of the downturn in the economy and the competition from cnbc, nbc's new entry in the cable business news market. pvb denied that there was any plan to somehow cheat employees (or others) by selling off fnn. the presumed strategy of the guild tapping fnn assets could not work, he said. "if people have the false hopes that we could go after fnn for our severance pay, that's a false hope," pvb said. "while the conspiracy theory is not true, so what if it was? it's best for everybody" that upi survive. he said the companies are insulated from each other's assets and liabilities, except for irs obligations and pension liabilities. the only way to crack that insulation between upi and fnn would be to prove fnn was an "alter ego set up to protect upi from these liabilities and that is just not the case. also, he said, "i don't think the guild has the resources to pursue it" in court. "it's a false hope." upi is 97 percent owned by infotechnology with the rest of the stock somehow connected to vazquez-rana and under proxy to infotech, while fnn is 47 percent owned by infotech and the rest publicly held. meanwhile, pvb said he no longer knows who are the major stockholders of infotechnology, which is publicly traded. "merrill lynch had a very substantial share, at one point it was 17 percent, but it was really very widely held. (earl) brian never had more than 10 percent." pvb would not say how much upi owes the irs. upi's liability to a management pension plan because of underfunding is "several millions of dollars, . . . more than $1 million, less than $5 million." accounts payable obligations are "several million dollars, which is not a problem." meanwhile, upi has no bank debt because it could never qualify to get any credit, he said. upi's greatest asset is its name, the logo, "the franchise value of those three letters." its highly vaunted communications system, however, is overrated, including an "inefficient satellite system . . ." pvb said fnn employees and other infotech employees are not protected from the 35 percent pay cuts. "several layoffshave already been done." he said that as the lone member of the board of directors, he is personally liable for its operations "and i can't afford a lawyer." if the guild turns down the pay cut, "i see no alternative but to shut the company down." the current crisis, he said, was not foreseeable sooner because "six or nine months ago we were operating as if earl brian was going to go on forever and ever with his grand strategy" for information businesses. however, he said the economy's downturn and "a financial scandal" at infotechnology caused the crisis. brian's "financial expectations were not met . . . he didn't see the market responding fast enough to the new products.' the multi-media fnn:pro product "was maybe before its time" and "he (brian) couldn't pull it off anymore . . . he was caught in a squeeze." also, pvb said the banks stopped extending credit. "if it hadn't been for a financial scandal (at infotech), who knows, maybe he could have gotten the banks to roll over the debt. he tried up to the last moment" before a "consensus" among brian, the board, leasing companies and the banks decided it was best to bring in the two als "to restore credibility to the process." on a personal note, pvb said: "i did not ask for this shit. i don't even consider myself ambitious. i didn't claw my way to the top, leaving bodies behind." now, he said, he's just trying to let upi survive. upi 11-09-90 02:29 pes