UPPER SADDLE RIVER, N.J. — Financially troubled Western Union Corp. announced Friday that two investors will pump $250 million into the telecommunications giant if the company satisfies certain conditions.
The investment in the 135-year-old company would come from Pacific Asset Holdings LP of Los Angeles and MDC Holdings Inc. of Denver, said Western Union spokesman Warren R. Bechtel.
The plan requires the merger of the Western Union Corp. with the Western Union Telegraph Co., a proposal rejected by the company's preferred stock holders in September.
Western Union has not posted an annual profit since 1982. The company lost $367 million in 1985, $58 million in 1984 and $59 million in 1983.
Terms of the agreement with the two investing companies call for Pacific Asset and MDC to invest $250 million and receive senior debt securities.
There is no timetable for the conditions to be met, said Bechtel.
As part of the agreement, the investor companies also would receive shares of new preferred stock that carries no dividend but is convertible into 36% of the outstanding common stock. The investing companies will also be guaranteed the right to buy 4% of the firm's common stock at $5 per share.
Also under the agreement, banks will receive a 64.5% cash pay-out on $300 million in outstanding loans.
As a result of these and other transactions, the outstanding debt of the company would be reduced by more than $750 million, Bechtel said.
The agreement is subject to a number of conditions, including acceptance of the exchange offers by not less than 85% of the outstanding debt, settlement with the company's credit banks, stockholder approval of the merger and related transactions, regulatory approvals, the receipt of a favorable investment banker's opinion as to fairness and other customary conditions.