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Icahn Opposition Threatens Texaco Plan

January 12, 1988|From Reuters

NEW YORK — Texaco's $3-billion agreement to settle its dispute with Pennzoil Co. and emerge from bankruptcy may have to be renegotiated to overcome opposition by Texaco's major stockholder Carl C. Icahn, lawyers in the case said Monday.

The strength of the accord, which is contained in Texaco's bankruptcy reorganization plan, was questioned when Icahn said last week that he would oppose it with his 12.3% Texaco stake. The pact, in which Texaco will pay Pennzoil $3 billion to end their fight over Texaco's 1984 acquisition of Getty Oil Co., requires approval by two-thirds of Texaco's voting shares.

"We're quite concerned that Icahn could have the voting power to block the Texaco plan if he chooses to do so," said Dennis O'Dea, counsel to Texaco's shareholders committee.

Restructuring Plan

In a separate development, Venezuela's Energy and Mines Minister Arturo Hernandez Grisanti on Monday declined to confirm or deny that Venezuela was seeking to buy an interest in Texaco to expand its program of overseas joint ventures.

He told reporters that the government was negotiating with several oil companies to buy stock in refining and distribution networks in other countries, but said that he could provide no more details.

Questions about Texaco's pact with Pennzoil arose as the troubled oil giant announced on Friday a broad restructuring plan which includes a $4.9-billion fourth-quarter charge and plans to sell $3 billion in assets.

The restructuring cannot proceed unless Texaco emerges from bankruptcy, and that may be threatened if Icahn wins sufficient support to oppose the current reorganization plan.

Last month, Texaco agreed to pay Pennzoil $3 billion to settle their dispute. Texas courts have upheld a record $10.3-billion award against Texaco stemming from a ruling that Texaco interfered with an agreement Pennzoil had to buy a large stake in Getty Oil. The judgment led Texaco to file for protection under the bankruptcy code.

Icahn has proposed a competing reorganization plan that would make an unfriendly takeover of Texaco easier. Among its provisions is one that eliminates Texaco's anti-takeover shareholder rights plan and another that allows 10% of Texaco shareholders to call a meeting to replace the company's board by a majority vote.

Last week Icahn asked the bankruptcy court for permission to submit the plan. Formal replies to the motion are due Thursday, and a hearing has been set for Jan. 20.

Sources close to Texaco have also said that if one element of the bankruptcy plan were altered, then other elements, such as the $3-billion settlement, could be changed as well.

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