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Key Features of Unocal Takeover Bid

April 09, 1985

The following are key features of the Unocal takeover bid by an investment group headed by T. Boone Pickens:

- From Oct. 22, 1984, through March 27 of this year, the Pickens group purchased 23.7 million shares of Unocal at an average price of $44.72.

- The Pickens group proposes to purchase an additional 64 million shares at $54 cash per share. If successful, this would give the group control of slightly more than 50% of Unocal. The offer is scheduled to expire May 3 but may be extended.

- If the Pickens group is successful in gaining control, securities would be offered for the remaining 49% stake in Unocal that it does not own. The group says the securities would have a value of about $54 per share. Payments on those securities would be made from funds generated by Unocal operations.

- To purchase the additional shares and pay related expenses, the Pickens group would spend an additional $3.59 billion. Sources of the funds for the purchase of Unocal shares will be split two ways: (1) A Pickens investment group will spend $889 million for 16 million shares; (2) An additional $2.69 billion will be spent for 48 million shares based upon financing arranged by Drexel Burnham Lambert.

- The funds of the Pickens investment group will come from $150 million in internally generated funds and working capital of Mesa Petroleum (including funds drawn under a previous credit line secured by oil and gas properties and stock of a Mesa subsidiary) and a new credit line of $1.1 billion "expected to be entered into with certain banks." The investment group reached agreement Sunday with an unidentified bank to serve as agent in arranging the bank financing. Funds also would be contributed by firms operated by Texas oilmen Jack E. Brown and Cyril Wagner Jr.

- Drexel will raise funds for an outfit that has been named Mesa Eastern, which would then purchase shares in Unocal. Drexel will sell $2.4 billion in equity and debt securities in Mesa Eastern. In addition, Drexel will sell $600 million of exchangeable preferred stock in Mesa Petroleum, the proceeds of which the oil firm will then use to buy preferred shares in Mesa Eastern. Drexel, according to a Securities and Exchange Commission filing, has informed the Pickens group that it "firmly believes" that it can obtain the required financing by May 3.

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