T. Boone Pickens Jr. won a legal skirmish Monday in his effort to take over Unocal Corp. and met with a group of Unocal shareholders in New York to plead for postponement of the annual meeting that Unocal has set for next Monday.
Earlier in the day, Pickens, chairman of Mesa Petroleum Co., told a Senate Finance subcommittee in Washington that a proposal to curb the use of "junk bonds," such as those his group would sell to finance its Unocal takeover, would only hurt stockholders and major investors who profit from big corporate mergers.
A state court in Delaware, where Unocal is incorporated, ruled that Unocal cannot prevent Mesa from adding items to the annual meeting's agenda if Mesa succeeds in delaying the meeting for 60 days.
Pickens is urging shareholders to vote for a postponement of the meeting so they can consider the $54-a-share takeover offer that he made April 8.
The court's ruling Monday gives Mesa an opportunity to put its proposals before shareholders and "throws their whole proxy statement into question," Pickens told a standing-room-only crowd of several hundred that met at New York's Waldorf-Astoria.
Unocal officials have advised shareholders not to delay the annual meeting because the bylaws prohibited the Pickens group from raising new issues if the meeting were delayed, Mesa officials asserted.
A Unocal spokesman, Barry Lane, said the court's ruling was "a matter of small significance." He noted that the court had simultaneously declined to rule on Mesa's broader challenge to Unocal's bylaws.
As expected, Pickens' attorneys also amended a lawsuit brought against Unocal and its directors to ask the judge to declare illegal the "poison pill" stock buy-back plan that Unocal offered last week in an effort to thwart Pickens.
Stance on 'Greenmail'
At the meeting with shareholders, which was organized by Mesa, Pickens turned aside a series of questions about the company's plans to fight back against Unocal's latest maneuvers. Pickens said only: "I think we still have cards to play--don't count us out here."
In response to another question, Pickens said he would not accept an offer from Unocal management for his group's 13.7% of company stock that is better than other shareholders would receive. "We will not--will not--greenmail the deal, absolutely," he said.
Moments later, however, Pickens amended his comment to say that the company would accept a Unocal offer if it were only slightly different from an offer extended to other shareholders. Shareholders said their concerns were raised because Pickens ended his struggle to take over Phillips Petroleum by accepting an offer that many considered greenmail.
"No matter what he says, I don't think you can rule out greenmail as a possible ending to this drama,"' said a money manager for an insurance company, who asked to remain unidentified.
Mesa officials insisted that they have not lost support from financial allies in their takeover bid, despite Unocal's buy-back offer and its proposal to spin off a large chunk of assets into a partnership to increase shareholders' values.
John Sorte, a managing director of Drexel Burnham Lambert Inc., Mesa's investment banking firm, said: "To date, we have $3 billion worth of financial commitments, and we still have (other) people who wish they were in that group."
Institutional shareholders at the session offered a range of views on the possible outcome of the takeover battle. "There are still any number of deals that could come out of this," said Dan Nicholas, mutual fund manager for Dreyfus Corp.
In his testimony to the Senate subcommittee, Pickens said he didn't see the danger that others see in junk-bond financing. Nor, he said, do sophisticated buyers of the bonds, such as "the IBM pension fund and the Procter & Gamble pension fund."
Such bonds typically are low rated and carry a high interest rate. They are issued with the pledge that the acquired company's cash would be used to help pay them off.
Pickens' testimony was echoed by financier Irwin L. Jacobs, whose empire was built on corporate takeovers. He said bills to limit the use of junk bonds would only deprive shareholders of profits they normally reap when takeover battles inflate the price of their stock.
The latest proposal, revealed Monday by Sen. Peter V. Domenici (R-N.M.), would declare a moratorium on the use of junk bonds in hostile takeovers for the rest of 1985.
Domenici told the Senate panel that he fears junk-bond takeovers are "mortgaging our energy security" by diverting money from petroleum exploration and research into new energy sources.
Assistant Treasury Secretary Ronald Pearlman said his agency is concerned about the economic effects of the large debts incurred in recent takeovers but said legislation to curb buy-outs is not a solution.