Western Union Chronology of Events - 1851-1995

Western Union Telegraph Company TimeLine

1851: The New York and Mississippi Valley Printing Telegraph Company, Western Union's predecessor, is formed by a group of businessmen in Rochester, New York.
1856: The New York and Mississippi Valley Printing Telegraph Company changes its name to The Western Union Telegraph Company following the acquisition of several competing telegraph systems.
1861: Western Union completes the first transcontinental telegraph line.
1866: Introduced stock tickers. New York Stock Exchange quotations.
1870: Launched W.U.® time service, helped standardized time nationally.
1871: Introduced Western Union Money Transfer service nationally.
1923: Introduced teletypewriters, joining branches and individual companies.
1935: Introduced first inter-city facsimile service
1943: Pioneered the first commercial inter-city microwave system.
1945: Western Union merged with the Postal Telegraph Company.
1958: Introduced Telex, a direct-dial consumer to consumer teleprinter service.
1960: Became a primary participant in the AUTODIN ASC system.
1964: Inaugurated transcontinental microwave radio beam system.
1970: Introduced Western Union® Mailgram® messages.
1974: Launched Westar I, America's first domestic communications satellite.

The Road to Corporate Oblivion
by Warren R. Bechtel
1979

R. W. McFall retires on May 1 after 14 years as Western Union CEO. R. M. Flanagan named new CEO.
Westar III launched.
National Sharedata Corp. sold.
20% of Westar system sold to American Satellite Corp.
Major write-down of WU Data Services Co. (DSC) assets.
1980

WU long-distance telephone service introduced.
WU lobbies Congress for repeal of Section 222 of Communications Act to permit its entry into international telex market.
Television and radio broadcasters expand use of Westar system.
1981

Transfer of TWX (re-named Telex II) from AT&T facilities to WU Digital Exchange System completed.
Further write-down of assets of DSC, which is folded into newly formed Field Service Division.
WU acquires 50% of Airfone.
Sale of real estate assets, including Upper Saddle River, NJ headquarters.
AT&T proposes sharp increase in rates for leased facilities.
WU Telex networks peak at 141,000 subscribers after 23 years of growth.
Sales of individual transponders to Westar customers begins.
Curtiss-Wright Corporation begins to purchase shares of WU common stock.
New federal law enacted at year end amending the Communications Act and permitting WU to enter international Telex market.
1982

Westar IV and Westar V launched.
AUTODIN II system canceled by Department of Defense.
WU sells PR Newswire Association, Inc.
WU EasyLink electronic mail service introduced on limited basis.
Company begins major push into cellular mobile telephone business through various joint ventures..
WU acquires E. F. Johnson Co., maker of cellular telephone equipment.
Curtiss-Wright increases its purchases of WU shares.
Net income reported for 1982 is the last annual profit reported by Western Union Corp.
1983

WU and Merrill Lynch form New York Teleport joint venture.
WU sells its remaining interest in Spacecom.
EasyLink expands as service provider on new WU packet switching network.
WU Mailgram contract canceled by the U.S. Postal Service.
WU international telex business expands.
Corporate debt increases.
Local distribution (fiber optic) business pushed by WU.
Workforce reduction implemented.
Sharp increase in local telephone access line charges, previously deferred, again proposed in anticipation of Bell System break up.
WU shifts from regulatory accounting to standard accounting, increasing depreciation charges.
Standstill agreement reached with Curtiss-Wright in November, placing three C-W directors on WU board.
Fourth-quarter special charge of $125 million results in net loss for 1983.
1984

Westar VI, launched from space shuttle Challenger, fails to achieve operational orbit.
WU Board of Directors approved 1984 expenditure of $115 million to support rapid acceleration of EasyLink growth.
New bank credit lines established.
Workforce reduction is implemented.
Flanagan ousted by Board of Directors on August 28 and replaced as WU CEO by T. R. Berner, Chairman of Curtis-Wright.
Banks cut off WU line of credit, producing sudden liquidity crisis.
Dividends omitted on WU common and preferred shares.
Salaries and wages temporarily reduced by 10% for both management and union employees.
R. S. Leventhal replaces Berner as CEO on December 21.
As year ends, bankruptcy looms.
1985

Deal worked out with banks to provide limited interim financing to avoid bankruptcy filing.
Aggressive program of WU asset sales begins, resulting in 1985 sale of E. F. Johnson Co. Telestat Systems, WU interest in Teleport and some cellular telephone interests to raise cash.
Workforce is reduced by 22 percent.
Prolonged strike by unionized employees disrupts operations.
Exorbitant access line charges put into effect by the new “Baby Bell” telephone companies during 1985 produce an increase in WU leased facilities costs of more than $100 million annually and prompt many telex subscribers to cancel service..
WU records fourth-quarter charge of $300 million for writedown in value of switching and transmission equipment.
1986

Curtiss-Wright sells all of its Western Union stock. All C-W Directors resign from WU board.
Government Systems Division sold to American Satellite Corp. for $155 million cash.
WU interest in Airfone sold to GTE for $39 million cash.
First comprehensive financial restructuring plan attempted with advice from Drexel Burnham Lambert. Plan fails to get required approvals from stockholders and debtholders.
Pacific Asset Holdings proposes to acquire WU in new restructuring plan.
WU takes fourth-quarter charge of $468 million, mainly for write-down of telex, private wire and satellite assets.
1987

Remaining WU cellular communications assets sold.
Pacific Asset replaced in May as potential WU acquirer by Bennett S. LeBow.
Eight-month effort begins to secure stockholder and debtholder approval of LeBow restructuring plan, which includes: buyout of banks at a substantial discount; issuance of new preferred stock for surrender of outstanding debentures, notes and old preferred shares by public holders of old WU securities; acquisition of ITT Worldcom, to be merged into WU; merger of Western Union Corp. and the Western Union Telegraph Co. into single entity to eliminate preferred dividend arrearages; and issuance of junk bonds through Drexel to raise $500 million in new money to pay off banks and provide working capital.
After several postponed deadlines, the LeBow plan secures all necessary approvals and is implemented on December 30.
With bankruptcy filing prepared and ready for submission to court, bankruptcy is averted at the eleventh hour.
1988

Lebow management team takes over on January 12. R. J. Amman replaces Leventhal as WU CEO. Most of previous officer group removed during first quarter.
Westar system sold to Hughes Aircraft Co.
New workforce reduction began, totaling 25% by yearend.
Worldcom private line business sold to Tele-Columbus AG, of Switzerland, for $56 million cash.
After three quarterly payments, dividends on new preferred shares issued to old shareholders and debtholders in 12/30/87 financial restructuring are omitted.
WU records charges totaling more than $1 billion for 1988, representing writedown of switching and transmission equipment and other non-recurring charges. Company has huge negative net worth.
Pension benefit accrual stopped 6/30/88 for management and 12/31/88 for union employees. Pension entitlements frozen as of those dates.
WU telex subscriber base, which had been in serious decline for three years, is now in meltdown.
1989

WU voice and private wire businesses sold to Telecom*USA.
Moorestown, NJ Central telephone bureau, in service since 1971, is closed.
WU acquires National Payments Network bill paying service.
Interest rate on $500 million of outstanding WU junk bonds, sold as part of 12/30/87 restructuring, is reset from 16½% to 19¼%, raising annual interest expense for this debt issue to $96 million.
New financial restructuring plan to issue new notes in exchange for 19¼% notes is proposed, but later withdrawn.
1990

Western Union Financial Services, Inc. (FSI) is established as a separate entity, a wholly owned subsidiary of Western Union Corporation. Henceforth, FSI will be the provider of Western Union Money Transfer Service.
WU sells its Advanced Transmission Systems unit (the local cable distribution business) to MCI.
New restructuring/recapitalization plan is proposed in the form of an exchange offer to alleviate debit service burden.
Company fails to make $51 million interest payment on junk bonds due in June, creating a default.
WU reaches agreement in July to sell its Business Services (telex and EasyLink) unit to AT&T for $180 million cash.
Union lock-out.
Exchange offer withdrawn after seven months of unsuccessful effort
WU proposes tender offer to buy up junk bonds at 50 cents for each $1.00 face amount.
Tender offer and sale of Business Services to AT&T are completed simultaneously on December 31., with cash received from AT&T, used to retire $338 million of WU junk bonds.
Default is cured and bankruptcy is forestalled, but WU warns that remaining debt burden will require further restructuring in 1991.
1991

Out-of-default status lasts until April, when interest payment due on old debentures is missed.
Shareholders approve change in name of parent company from Western Union Corporation to New Valley Corporation. Western Union identity is vested in FSI, operating as an independent subsidiary, whose business is strong.
Company begins discussions with Pension Benefit Guaranty Corporation (PBGC) concerning PBGC takeover of underfunded Western Union Pension Plan.
FSI forms international division to pursue worldwide money transfer business, which is growing rapidly.
In November, several creditors file petition with U.S. Bankruptcy Court in Newark, NJ seeking to force New Valley Corp. into Chapter 11. New Valley challenges this petition, and the court agrees to an indefinite stay in the proceedings. Bankruptcy is now a matter of time.
1992

Involuntary Chapter 11 action pending in Bankruptcy Court is stayed for all of 1992.
New Valley reaches agreement with PBGC for takeover of Western Union pension plan. Based on that agreement, in May, New Valley proposes a prepackaged bankruptcy reorganization plan contemplating a quick in-and-out of Chapter11. Other major creditors don't sign on, however, and at yearend prospects for prepackaged plan are dimming.
FSI's consumer money transfer business shows substantial growth during the year, with international component especially strong.
1993

On March 31, faced with a ruling by the Bankruptcy Court that the 16-month stay of the creditors' petition for an involuntary Chapter 11 order would not be extended any further, and unable to secure agreement among its creditors on its prepackaged plan, New Valley Corporation, at its own request, is placed under the protection of Chapter 11 of the U.S. Bankruptcy Code as a debtor-in-possession by the court. Western Union Financial Services Inc. (FSI) is not included in the bankruptcy filing.
Trading in New Valley common and preferred shares is immediately halted by the New York Stock Exchange, which then proceeds to de-list the company's stock.
Securityholders jockey for claimant position as a complex and contentious bankruptcy reorganization process begins. New Valley is given four months to present a proposed reorganization plan to the Court, and this period is later extended to eight months.
On November 24, New Valley files it's plan of reorganization with the Bankruptcy Court. The plan provides for cash payment of most of the creditors' claims, issuance of new debt securities, retention of the pension plan within the company, and new equity infusions by Apollo Advisers, L.P. and Electronic Data Systems, Inc. (EDS). Apollo would acquire a controlling interest in the company. The secured creditors, unsecured creditors, preferred shareholders and the PBGC all oppose New Valley's plan.
FSI, which now accounts for virtually all of New Valley's ongoing business, records accelerated growth in revenue and income for 1993.
1994

In January, the Bankruptcy Court terminates the ten-month period during which New Valley alone had been permitted to propose a Chapter 11 reorganization plan. As a result, in February, three alternative reorganization plans are filed with the court by debt-holders and shareholders.

In May, First Data Corporation (FDC) offers to acquire Western Union Financial Services, Inc. (FSI) for $480 million in cash plus assumption of the underfunded Western Union pension plan. New Valley rejects this offer as inadequate.

On June 9, FDC increases the cash portion of its offer to $595 million, and New Valley announces preliminary agreement to accept this offer.

On June 15, New Valley rescinds agreement with FDC and announces acceptance of higher offer for FSI from Forstmann, Little & Co., which will pay $650 million in cash plus assumption of the pension plan.

On June 23, FDC increases the cash portion of its offer to $660 million.

On July 7, the Bankruptcy Court rules that FSI is to be sold in a court-supervised auction to be held in September. The sale of FSI, whose robust business and prospects in the international money transfer market have attracted cash offers well beyond the previously assumed level of it's worth, has become the clearly apparent means of resolving New Valley's bankruptcy and settling creditors' claims.

On August 3, New Valley announces that, in accordance with the new labor contract negotiated with its employee union, FSI's customer service center located in Reno, Nevada will be closed on December 31, 1994.

On September 2, First Financial Corporation (FFMC), of Atlanta, announces that it will bid $800 million in cash, plus assumption of the pension plan in the forthcoming auction for FSI.

On September 19, the auction sale of FSI is held in the Bankruptcy Court in Newark, New Jersey. The winner is FFMC, with a bid of $893 million in cash plus assumption of the pension plan liability (valued at $300 million) for a total consideration of $1.193 billion.

In October, an agreement is hammered out among the various parties at interest on a New Valley reorganization plan with all claimants sharing in the cash proceeds to be realized from the sale of FSI.

On November 1, the agreed-upon reorganization plan is confirmed (approved) by the Bankruptcy Court, concluding three years of court proceedings.

On November 15, the sale of FSI to FFMC is consummated.
1995

In January, New Valley Corporation emerges from Chapter 11 bankruptcy. It exists today, on paper, as an affiliate of Brooke Group Ltd., which is located in Miami, Florida and is controlled by Bennett S. LeBow. It serves as a corporate vehicle for Brooke's investments in brokerage services, real estate operations and other areas.

In June, FFMC agrees to merge into (be acquired by) First Data Corporation (FDC).

In October, this merger is completed and the FFMC name disappears. In a strange turn of events, FDC, which had failed in it's attempts to acquire FSI before and during the auction sale in 1994, now acquires FSI by acquiring its acquirer.

FSI, which has inherited the valuable "Western Union" brand name, exists today as the largest subsidiary of FDC. Its worldwide consumer money transfer service has grown to the point where, in 2001, it will record nearly $3 billion in revenue and about $800 million in profit.

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