After months of public bickering, the owners and managers of United Press International yesterday appeared close to a truce that could speed up efforts to find a buyer for the beleagured wire service, UPI sources said.
After a marathon 11-hour session Thursday in the Arlington offices of U.S. bankruptcy trustee William White, owners Douglas Ruhe and William Geissler hammered out the first details of a possible agreement with Chairman Luis Nogales, who has managed UPI while it is being reorganized under Chapter 11 bankruptcy proceedings.
UPI officials said early yesterday that they believed an announcement about the agreement would be released by late afternoon. However, when the agreement was not released, participants said that the delay was caused by a "battalion" of lawyers for various parties who wanted to study the document over the weekend.
Meanwhile, U.S. Bankruptcy Judge George F. Bason stalled efforts by telephone companies serving UPI to cut off the wire service phones as of today. Bason gave UPI another 30 days to pay its bills.
At the same hearing, UPI comptroller Jack Kenney said that UPI is now generating enough cash to cover its bills while the company figures out how to pay $37 million in debts.
UPI attorney Frank Dicello also told the court about the possible agreement at the top level of UPI, saying that the two sides agreed to work together to find a buyer.
The apparent agreement emerged as several companies, including Reuter, expressed interest in purchasing UPI. However, top news executives from other companies said that such negotiations were being hindered in part because UPI had been speaking with two voices, with owners and managers often at odds about who could represent the company and whether an offer would be considered acceptable.
The feud in the executive suite of UPI erupted in March after owners Ruhe and Geissler tried to fire Nogales six months after he had taken over the management of the company. Under pressure from one of the key lenders for UPI, Foothill Capital Corp., the co-owners ceded control and reinstated Nogales as chairman on March 7 for 120 days.
However, Ruhe and Geissler contended that when UPI filed for Chapter 11 protection from bankruptcy on April 28, the March 7 agreement returned the company to their control. Nogales argued that the bankruptcy proceedings took precedence over the agreement and that the company was being controlled by Judge Bason.
In the meantime, co-owners Ruhe and Geissler filed suit in Delaware recently to retain control of the parent company for UPI, Media News Co. Delaware Chancellor Joseph Walsh ruled that Ruhe and Geissler have the authority to oust Nogales as head of Media News, but UPI officials said that the move would not affect the operation of UPI.
At the same time, UPI reporter Gregory Gordon reported management sources saying that Ruhe and Geissler had "reneged" on a promise to funnel $2 million into UPI and had diverted millions of dollars in scarce company funds into "questionable" business deals.
Ruhe charged that the Nogales team was unfairly using the wire service to print a "smear" against the owners.
As the battle raged, UPI was pleading with newspaper clients to add an extra 9.9 percent to their bills and UPI spokesman Bill Adler said the response had been "50-50" among those taking the service.
However, some of the largest papers have either delayed or refused to pay above their contract with UPI. Los Angeles Times Publisher Tom Johnson said that the Times-Mirror chain "will not go with the 9.9 percent. We are going to go with our present contract."
"That in no way reflects a lessening of our commitment," said Johnson, but he added that Times-Mirror editors are monitoring the UPI wire carefully.
"We do have a 60-day clause if there is any erosion," he said.
Similarly, The New York Times has decided not to pay the extra levy imposed because of the latest UPI emergency, according to James L. Greenfield, assistant managing editor for administration. And Washington Post Executive Editor Benjamin C. Bradlee said he would wait for a few weeks "to see what comes out of the hat" at UPI.
The Boston Globe and The New York Daily News have agreed to the surcharge.