Western Union Sells Units To AT&T To Pay Off Bondholders
UPPER SADDLE RIVER, N.J. (AP) _ Western Union Corp., hoping to avoid involuntary bankruptcy, completed a deal Monday to sell its telex and electronic mail businesses to American Telephone & Telegraph Co. for $180 million.
Western Union will use the money to buy back some of its junk bonds, helping ease its crushing interest-payment burden.
Western Union’s remaining operations are its money-transfer service, electronic bill-paying service and electronic letter services such as Mailgram.
Western Union will buy back $335 million worth of its high-interest, high- risk bonds at 50 cents on the dollar, the company said. The buyback involves $329 million worth of 19 1/4 percent notes and $6 million of 16 percent notes from investors who accept the offer by Thursday.
Western Union’s debt will stand at $311 million after the bond buyback.
The transaction eases the threat of involuntary bankruptcy, which has dogged the company since it missed a $51 million interest payment in June, said Robert J. Amman, president and chief executive officer. But it does not end its problems.
″We have made it clear to the company’s creditors that further refinancing of debt will be required in 1991,″ Amman said in a news release. Company spokesman Warren R. Bechtel said that could mean selling more assets, offering new deals to investors or securing new financing.
For the past seven years, Western Union’s interest payments have pushed the company into the red.
Amman said the transaction with AT&T was a turning point for Western Union, one of the nation’s oldest companies and a pioneer in the telegram and telex businesses.
″With the sale ... the company is no longer a telecommunications carrier and can focus its efforts on providing value-added services in areas where its strengths can be brought to bear most effectively - most notably our financial services business, which includes the Western Union Money Transfer services,″ Amman said.
AT&T plans to create a new unit combining business communication services it previously offered with Western Union’s telex and Easy Link electronic mail services, said Linda Haertlein, an AT&T spokeswoman.
″The products we have, although essentially the same, have separate customer bases, and have been focused to some extent on different industries. We plan to continue both product lines and eventually develop a new line that brings the best of the new lines together,″ she said.
Western Union is retaining its Priority Services division, which provides Mailgram, priority letter and custom letter services.