NEWARK, N.J. — Western Union Corp. shareholders have approved a restructuring plan, the troubled telecommunications company said Monday.
The vote represents a major step for Western Union, the 136-year-old company that linked the United States with telegraph wires. Without the plan, the company has said it may have to file for bankruptcy protection.
Two more parts of the proposal must be completed: an exchange of debt for equity in the new company and the raising of $500 million in "junk bonds."
If any one aspect fails, the plan will be scrapped, and Upper Saddle River N.J.-based Western Union has said it then may have to seek protection under the U.S. Bankruptcy Code.
Analysts have said that if the plan is not completed by year-end, the loss of tax benefits probably would ruin its chances of success.
By their vote, announced Monday at a reconvened meeting, shareholders approved a merger of the corporation and its principal subsidiary, Western Union Telegraph Co., and agreed to exchange their stock for equity in the new company.
The merger will have the effect of reducing the preferred status of certain preferred shareholders.
Drexel Burnham Lambert, Western Union's financial adviser and an important stockholder, said it was "highly confident" it can raise the $500 million in high-yield, high-risk debt, Western Union said in announcing the voting results.
Western Union's stock rose 12.5 cents a share Monday to close at $2.25 a share on the New York Stock Exchange.