The future of United Press International, the nation's second general wire service, hung precariously in the balance Wednesday as owners, management and creditors tried to seal a tentative agreement designed to save the financially imperiled news agency.
The tentative pact, reached Tuesday night, would rearrange the ownership structure of the news service and would reinstate Luis Nogales, who was fired from his post of president on Sunday, UPI sources said.
Under the agreement, Douglas Ruhe and William Geissler, the two Nashville businessmen who bought UPI two years ago for $1, were to relinquish most of their 90% stake in UPI to the company's major creditors, insiders said. The creditors include Foothill Capital Corp., a Century City-based venture-capital company that has become UPI's primary lender; American Telephone & Telegraph Corp.; American Express Co., and RCA Corp.
With only Ruhe's formal approval needed before the agreement could be made public, Ruhe "became unavailable" Tuesday night, throwing the news agency's future again into turmoil, the sources said.
Negotiations between Ruhe, Nogales and union representatives resumed early Wednesday in Los Angeles at an undisclosed location, although apparently the two sides were not as close to a formal agreement as they had been the night before.
According to a UPI story released Wednesday, Ruhe and Nogales have reached a "handshake" agreement and by late Wednesday were drafting formal papers on the equity restructuring in exchange for the forgiveness of some company debt and the return of Nogales as chairman, president and chief executive. However, several major issues, including liability for a reported $17 million in short-term debts, have yet to be resolved, the story said, quoting unnamed sources. UPI reported that Foothill was pushing hard for a settlement before Thursday.
Also clouding UPI's future were reports that its unpaid bills are far greater than estimated. According to sources within the highest circles of the new agency, Nogales, in going over UPI's books Wednesday morning, discovered that the company's debt was at least $25 million--not $17 million as was previously reported.
"It's $25 million and counting," one insider said.
A UPI spokesman said only that "discussions are still under way and we anticipate some official announcement."
Nogales, Ruhe and Geissler, who was reported to be in Washington, could not be reached for comment. At the negotiations, Nogales is representing the interests of creditors and four other executives who left UPI after Ruhe fired Nogales during negotiations on Sunday. UPI's union, the Wire Service Guild, is being represented by President William Morrissey and Richard Pattison, international representative of the Newspaper Guild.
UPI's creditors either declined comment or said they have not been informed about the progress of the negotiations.