One of United Press International's major stockholders said yesterday that a new bid from a group of investors to buy the news service is too low and predicted that it will be followed by better offers.
Douglas Ruhe, one of the controlling owners of Media News Corp., UPI's parent company, termed "inadequate" the proposal made Monday by the investor group, represented by Washington attorneys David Rubenstein and Richard Beatty, which offered to pay off about $17 million of the news service's debts and provide working capital for one to two years.
"At least three other offers will be made," said Ruhe, who, together with William Geissler, purchased UPI in 1982. He said that current management has undervalued the company's assets and underestimated its earning potential, and that UPI is worth "a minimum" of $44 million.
UPI is currently protected from its creditors as it tries to reorganize its operations and finances under Chapter 11 of the federal bankruptcy code. When it filed for protection in late April, the 75-year-old news service listed assets of $20 million and liabilities of $45 million.
The current offer is "inadequate and insubstantial, and will be exceeded by offers by very large, very capable corporations," said Porter Bibb, managing director of Ladenburg, Thalmann & Co., which is acting as an investment banker for Ruhe and Geissler. "There are some extremely capable and appropriate U.S.-based global communications companies making serious and intensive evaluations of UPI."
A committee of UPI's unsecured creditors plans to meet next week to evaluate the offer made Monday by the investors represented by Rubenstein and Beatty, both with the law firm of Shaw, Pittman, Potts & Trowbridge.
A UPI spokesman confirmed that the investor group, which plans to identify its members if its offer is accepted, is "one of several groups" conducting negotiations with UPI management. "These talks have just reached a more advanced stage," said the spokesman, David Wickenden.
Beatty said yesterday that there is "no great mystery" about who is involved with the group he represents, but that there is "no point in public identification of who's involved" until the bid is accepted.
Ruhe said he believes the offer was made by former Treasury secretary G. William Miller, whose firm had worked as an investment banker for UPI; by UPI's major secured creditor Foothill Capital Corp., and current management, led by UPI Chairman Luis Nogales.
The offer by the investor group would "squeeze our equity position out" and "include a substantial ownership stake for current management," Ruhe said.
Rubenstein, who represents Miller's company, dismissed Ruhe's theory about the identities of the investors as "ridiculous" and "not true."
"Bill Miller is just not involved in this, Foothill is not involved, and Nogales could not gain an equity position" through the proposed deal, Rubenstein said.
Nogales said Ruhe's statement was "absolutely ridiculous." Nogales, who has battled Ruhe and Geissler for control of the company, said, "I have not had any discussions with these investors about my having an equity participation."
Nogales also said the bankruptcy court supervises the reorganization, and therefore he has "no authority to squeeze out anyone."
Beatty said "Ruhe and Geissler would have no idea" who the investors are.
Nogales said he knows some of the investors, but cannot discuss who they are.
Rubenstein also denied rumors that the investor group includes Mortimer B. Zuckerman, chairman of U.S. News & World Report.
Although UPI creditors reached yesterday said they had not seen the offer, they were divided over whether to insist on knowing the identities of the investors before approving a deal.