In its nailbiting efforts to avoid having to file for Chapter 11 bankruptcy protection, Western Union Corp is preparing to file an amendment to its recapitalisation plan – but 1980s corporate raider Carl Icahn has turned his attention to stricken, debt-laden companies as his ploy for the 1990s, arguing that incumbent managers at the likes of Western Union are unreasonably holding on to equity and treating holders of their battered bonds inequitably. He has bought up a large line of distressed bonds of Western Union, which are trading at around 45 cents on the dollar, and is urging other bond holders not to approve the recapitalisation plan – and acceptances must be received from holders of 95% of the bonds out. Once Western Union has sold its telex, electronic mail and mailgram services to AT&T Co for $180m, it will be left with mainly financial services businesses which turned in operating profit of $95m on sales of $309m last year. Under the revised recapitalisation plan, Western Union proposes to exchange for each $1,000 face value 19.25% senior reset note a new $450 13% note due September 14 1992, and for each $1,000 of 16% notes new $550 second priority note paying 9.5% – up from a previously proposed 8% due December 31 1995. Accompaning each of the $450 or $550 notes would be 200 common shares, 225 Class C common and 275 Class D common, reducing the votes controlled by Bennett LeBow to 29.6% from 46.4%. Interest on the 13% notes would be paid in further notes rather than cash up to June 30 1991, and on the 9% notes in new notes up to December 31 1993, an improvement on the June 30 1994 date previously set for interest payments in cash. When they were issued, the promise with the reset notes was to increase the interest payments to the point where they would again trade at 100 cents on the dollar when the price in the market was below $100% at preset break points, a promise Western Union was unable to keep, so that they now trade at 45 cents on the dollar.
