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Western Union Posts $459-Million Loss

February 26, 1987

Western Union Corp., the communications concern that has been teetering on the verge of bankruptcy, Wednesday reported a fourth-quarter net loss of $459.9 million, due mainly to large writedowns.

The loss came on revenue of $213.6 million. A year earlier, the Upper Saddle River, N.J.-based firm posted a deficit of $335.7 million on revenue of $230.9 million.

Western Union said the fourth-quarter writedowns, totaling $468 million, included a charge of $362 million from its program to consolidate and close down redundant telex and private-line switching equipment. Another $106 million was charged against its Westar satellite system.

For all of 1986, the company lost $531.2 million, compared to 1985's $367.2 million loss. Revenue for the year totaled $889.2 million, down from the $982.6 million reported a year earlier.

The 135-year-old company has been pushed toward bankruptcy by losses from its Easylink electronic mail service.

Last week, it made a long-awaited offer to exchange existing debt for new preferred stock and threatened to enter bankruptcy proceedings if debt holders refused the offer.

The exchange is part of a restructuring plan proposed by an investor group, which is investing $250 million in Western Union in return for a 40% stake. The group includes the Pacific Asset Holdings LP investment concern in which Michael Milken, the "junk bond" mastermind of Wall Street firm Drexel Burnham Lambert Inc., is a partner. In January, Western Union agreed with its banks on reduced repayment of loans, moving it a step away from bankruptcy. But that accord was conditional on the success of other parts of the restructuring plan, including the debt for its equity exchange offer.

The investor group has said that, if it takes control of Western Union, it will sell its communications operations and build it into a financial services concern.

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