NEW YORK — Taking a cue from New York financier Carl C. Icahn, a member of the committee representing Texaco shareholders Wednesday resigned to protest demands by others on the committee that Texaco's board be expanded to include several shareholders.
The resignation by New Jersey investor Joseph Iny, who owns at least 25,000 Texaco shares and is an outspoken supporter of Texaco management, further fractures the $3-billion settlement pact between Pennzoil and the committees representing Texaco shareholders and creditors--a pact that seemed solid just two days ago.
Icahn, Texaco's largest shareholder, startled the financial world late last week by persuading Pennzoil and the Texaco equity committee to put aside their considerable differences and negotiate a $3-billion settlement proposal that U.S. Bankruptcy Judge Howard Schwartzberg is willing to present to Texaco shareholders for a vote. When the Texaco creditors' committee added its blessing to the pact three days later, many people close to the proceedings considered it a done deal.
Agrees With Icahn
But on Tuesday, Icahn threatened to derail the entire settlement pact that he was instrumental in forging. His quarrel is not with the price tag. It is with the demand by Texaco's equity committee for 12 new shareholder seats on Texaco's board as part of the plan that will enable Texaco to emerge from Chapter 11 bankruptcy proceedings.
Iny, reached late Wednesday at his home in Deal, N.J., said that "Mr. Icahn's comments in the newspapers told me that perhaps it was time for me to pull out" of the proceedings "because I agree with him" about the folly of demanding such a dramatic change in the makeup of Texaco's board.
His resignation, in a letter to Texaco Chairman James W. Kinnear, says he no longer wants to be party to a committee that has "overstepped its authority."
Iny, who is elderly, also acknowledged that he is having difficulty "weathering the strains of the pace of events." That is a reference to the talks between Pennzoil, Texaco and the two Texaco committees, which have continued virtually nonstop ever since last Friday.
Sources close to the talks said Wednesday that the negotiators have made very little progress since Tuesday, when Icahn announced that he can no longer support the proposal. Since then, the equity committee reportedly has dropped its demand for 12 seats but is still insisting on a large representation on Texaco's board.
Iny has been a vocal critic of the 1985 Texas court decision that Texaco wrongly interfered with Pennzoil's failed acquisition of Getty Oil. He told a Wall Street Journal reporter last July that he doesn't advocate a settlement and would strongly protest any amount higher than $200 million to $300 million.
Texaco itself has offered $2 billion, while Pennzoil is now saying it won't accept less than $3 billion.