[GreenKeys] The demise of Western Union and its services

[Don Robert House]

A depressing story.  Edited for your information.  The complete 
history "Road to Corporate Oblivion" can been seen at:

http://autodin.net/alp/western_union_chronology_of_events.htm

1980

Western Union long distance telephone service introduced.

Western Union 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 (renamed Telex II) from AT&T facilities to Western 
Union Digital Exchange System completed.

Further write-down of assets of DSC, which is folded into newly 
formed Field Service Division.

Western Union acquires 50% of Airfone.

Sale of real estate assets, including Upper Saddle River, New Jersey 
headquarters building.

AT&T proposes sharp increase in rates for lease facilities.

Western Union Telex networks peak at 141,000 subscribers after 23 
years of growth.

Sales of individual transponders to Westar customers begins.

Curtiss-Wright begins to purchase shares of Western Union common stock.

New federal law enacted at year end amending the Communications Act, 
permitting Western Union to enter international telex market.

1982

Westar IV and Westar V launched.

AUTODIN II system canceled by Department of Defense.

Western Union sells PR Newswire Association, Inc.

Western Union Easylink electronic mail service introduced on a limited basis.

Company begins major push into cellular mobile telephone equipment.

Western Union acquires E F Johnson Company, manufacturer of cellular 
telephone equipment.

Curtiss-Wright increases its purchase of Western Union shares.

Net income reported for 1982 is the last annual profit reported by 
Western Union Corporation

1983

Western Union and Merrill Lynch form New York Teleport joint venture.

Easylink expands as service provider on new Western Union packet 
switching network.

Western Union Mailgram contract canceled by the U.S. Postal Service.

Western Union international Telex service expands.

Corporate debt increases.  Work force reduction implemented.

Sharp increase in local telephone access line charges, previously 
deferred, again proposed in anticipation of Bell System break up.

Fourth quarter special charge of $125 million results in net loss for 1983.

1984

Western Union 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.

Banks cut off Western Union line of credit, producing sudden liquidity crisis.

Salaries and wages temporarily reduced by 10% for both management and 
union employees.

As year ends, bankruptcy looms.

1985

Deal worked out with banks to provide limited interim financing to 
avoid bankruptcy filing.
Aggressive program of Western Union asset sales begins, resulting in 
1985 sale of E. F. Johnson, Telestat Systems, Western Union interest 
in Teleport and some cellular telephone interests to raise cash.

Work force reduced by 22 percent.

Prolonged strike by unionized employees disrupts operation.

Exorbitant access line charges put into effect by "Baby Bell" 
telephone companies during 1985 produce an increase in Western Union 
leased facilities costs of more than $100 million annually and prompt 
many telex subscribers to cancel service.

Western Union records fourth quarter charge of $300 million for 
write-down in value of switching and transmission equipment.

1986

Curtiss-Wright sells all of its Western Union stock.  All 
Curtiss-Wright Directors resign from board.

Government Systems Division sold to American Satellite Corporation 
for $155 million cash.

Western Union interest in Airfone sold to GTE for $59 million cash.

Western Union takes fourth-quarter charge of $468 million, mainly for 
write-down of Telex, private wire and satellite assets.

1987

Remaining Western Union cellular communications assets sold.

After several postponed deadlines, the Bennett S. LeBow plan secures 
all necessary approvals and is implemented on December 30th. 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 12th.  Most of previous 
officer group removed during first quarter.

Westar system sold to Hughes Aircraft Company

New workforce reduction began, totaling 25% by year end.

Worldcom private line business sold to Tele-Columbus AG of 
Switzerland for $56 million cash.

Western Union records charges totaling more than $1 billion for 1988, 
representing write-down 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.

Western Union Telex subscriber base, which had been in serious 
decline for three years, is now in meltdown.

1989

Western Union voice and private wire businesses sold to Telecom USA.

Moorestown, NJ Central telephone bureau, in service since 1971, is closed.

Western Union acquires National Payments Network, a bill paying service.

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.

Western Union sells its Advanced Transmission System unit (local 
cable distribution business) to MCI.

Western Union reaches agreement in July to sell its Business Services 
(Telex and Easylink) unit to AT&T for $180 million cash.

Union lock out.

1991

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.

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.

FSI's consumer money transfer business shows substantial growth 
during the year, with international component especially strong.

1993

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.

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.

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 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 it's acquirer.

FSI, which has inherited the valuable "Western Union" brand name, 
exists today as the largest subsidiary of FDC.  It's 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



-- 
--------------------------------------------------------
Don Robert House
North American Data Communications Museum
URL: http://www.nadcomm.org
Computer Museum of America
URL: http://www.computer-museum.org

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