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December 2, 1987

WESTERN UNION DEBT RATINGS CUT TO D FOR DEFAULT AS IT PASSES INTEREST PAYMENTS

By CBR Staff Writer

Western Union Corp is winding up pressure further on its bankers and creditors to agree to its reorganisation plan by passing the interest payments on several classes of debt, including $1.3m of interest due on $27.2m of 9.25% Western Union Telegraph debentures, and the interest on $227m of bank debt. In all it missed $3.6m of interest payments on $283m of debt. The $227m of bank credit is anyway nominally in doubt because while the banks have not actually called the loans in, they have not agreed to a further extension of the loans. The Upper Saddle River, New Jersey telecommunications company has threatened that it will file for Chapter XI bankruptcy protection if its restructuring plan, which would culminate in merger with ITT World Communications, is not approved by its creditors. It says it has the cash to meet the dividends but believes that in the circumstances it would be wiser to conserve it – a common move by companies contemplating a bankruptcy filing. As a result of the move, Standard & Poors Corp has downgraded some of Western Union’s debt issues to D for Default. Its subordinated debentures go to D from double C, and its preference shares to D from single C.

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