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NEW VALLEY CORPORATION REACHES AGREEMENT WITH PBGC AND REGISTERS PREPACKAGED CHAPTER 11 REORGANIZATION PLAN

 NEW VALLEY CORPORATION REACHES AGREEMENT WITH PBGC
 AND REGISTERS PREPACKAGED CHAPTER 11 REORGANIZATION PLAN
 UPPER SADDLE RIVER, N.J., May 15 /PRNewswire/ -- New Valley Corporation (NYSE: NVL) announced today that it has reached an agreement in principle on key terms with the Pension Benefit Guaranty Corporation (PBGC) for the settlement of its unfunded pension plan liabilities. The agreement contemplates that the company's pension plan would be terminated and trusteed by the PBGC subject to final approval. New Valley intends to seek approval of its public debtholders and other creditors to implement this agreement as part of a Prepackaged Plan of Reorganization under Chapter 11 of the Federal Bankruptcy Code. The proposed reorganization plan is set forth in a registration statement filed yesterday with the Securities and Exchange Commission.
 New Valley is undertaking this financial reorganization in order to settle and satisfy its unfunded pension liability and, through the issuance of new securities to replace its presently outstanding debt, to reduce its debt-service requirements to a level that is more consistent with the cash flow of its existing businesses. While the reorganization is pending, New Valley intends to continue with its normal business operations and to make payment in full on a timely basis to its trade creditors who continue to extend credit in the ordinary course of business.
 The proposed Plan of Reorganization provides for a new holding company structure within which Western Union Financial Services, Inc. (FSI), which is currently a wholly owned direct subsidiary of New Valley Corporation, will become a wholly owned subsidiary of FSI Holdings I, Inc (Holdings I). New Valley will contribute all of the stock of FSI to Holdings I, which will be a wholly owned subsidiary of FSI Holdings II, Inc (Holdings II). New Valley will own 80 percent of the stock of Holdings II, and 15 percent will be distributed to the PBGC and the holders of New Valley's 19-1/4 percent Senior Secured Notes. The remaining 5 percent of Holdings II stock will be reserved for management incentives.
 This holding company structure is designed to provide maximum value for New Valley's creditors, including the PBGC, while also preserving the benefits of New Valley's Net Operating Loss Carryforwards (NOLs), which would be used to offset anticipated FSI taxable income. As of Dec. 31, 1991, these NOLs amounted to approximately $1.04 billion, of which $687 million were unrestricted.
 If the Prepackaged Plan of Reorganization receives sufficient creditor approval and is confirmed by the Bankruptcy Court, the following new securities will be issued:
 -- $194 million of 10 percent Senior Secured Debentures Due 2004, to be issued by Holdings I. These debentures, which will be secured by the stock of FSI and the Western Union trade name, will be issued to the PBGC ($105 million) and, on a pro-rata basis, the holders of New Valley's 19-1/4 percent Senior Secured Notes ($89 million).
 -- $156 million of 11 percent Senior Secured Debentures Due 2008, to be issued by Holdings II. These debentures, which will be secured by the stock of Holdings I, will be issued to the PBGC ($84.2 million) and, on a pro-rata basis, the holders of the 19-1/4 percent Notes ($28.5 million) and the holders of New Valley's other outstanding public debt and other unsecured creditors ($43.3 million).
 -- $175 million of 5 percent Subordinated PIK Debentures Due 2012, to be issued by Holdings II. These subordinated debentures will be issued, on a pro-rata basis, to the PBGC, the 19-1/4 percent Noteholders and the holders of New Valley's other outstanding public debt and other unsecured creditors.
 -- Ten million Common Shares, to be issued by Holdings II. Of these shares, 810,000 (or 8.1 percent) will go to the PBGC, 690,000 (or 6.9 percent) to the holders of the 19-1/4 percent Notes, and 8,000,000 (or 80 percent) to New Valley Corporation, with the remaining 500,000 shares (or 5 percent) reserved for management incentives.
 New Valley Corporation conducts its principal operations through its wholly owned subsidiary, Western Union Financial Services, Inc. (FSI). The North American unit of FSI provides Western Union Money Transfer, bill-payment and other financial services to consumers and businesses in the United States. It also provides Money Transfer service in Canada and between the U.S. and Canada and Mexico. The international unit of FSI provides Western Union Money Transfer services in countries outside of North America. In addition, the company provides Western Union Mailgram(R) and other messaging services to high-volume users through its Western Union Priority Services unit.
 The foregoing is not and shall not be deemed an offer, including an offer of any security, or a solicitation of any vote or consent in connection with the proposed Plan of Reorganization. Any such offer or solicitation will be made only by means of a Solicitation of Acceptances included in a registration statement filed with and declared effective by the Securities and Exchange Commission.
 -0- 5/15/92
 /CONTACT: Warren Bechtel of New Valley, 201-818-5790, or 212-868-8888/
 (NVL) CO: New Valley Corporation ST: New Jersey IN: FIN SU:


SH -- NY019 -- 0593 05/15/92 08:59 EDT
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Publication:PR Newswire
Date:May 15, 1992
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