Icahn Says He’ll Sell Phillips if Board Is Ousted : Financier Pledges He Won’t Take ‘Greenmail’

Financier Carl Icahn said Thursday that if shareholders join him in rejecting a refinancing plan for Phillips Petroleum Co. next week, he will attempt to have the company sold to an employee group or another bidder “at a fair price” after first unseating the board of directors.

“I’m not going away under any conditions,” he said, adding that he would hold his stock--currently 7.5 million shares, or 4.85% of Phillips--at least until this spring’s annual meeting when he would try to oust the company’s directors.

Icahn pledged not to abandon his takeover efforts and not to subject the company to “greenmail.” Greenmail refers to a company’s repurchase of its own shares at a premium from an unwanted major holder to head off a takeover. The maneuver often depresses the price of the stock held by other shareholders.

Second Injunction Lifted

“I have sold (stock) back to companies because sometimes you have no choice,” he said. “But in those cases, I never said I wouldn’t (sell it back), and in cases where I said I wouldn’t, I have never ever broken my word.”

Icahn has proposed a tender offer at $60 per share for about 45.3% of Phillips’ shares, which would give him 50.5% of the company. He then would offer remaining shareholders $50 per share in debt securities.

The financier said he hopes to arrange financing through the New York investment firm of Drexel Burnham Lambert. Earlier on Thursday, a federal judge in Oklahoma lifted the second of two state court injunctions that had blocked his bid.

Icahn said Thursday that he would ask shareholders for their “consents” to remove the board of directors--an important step to defuse a “poison pill” inserted by Phillips in its revised recapitalization plan. The “pill” is a shareholders’ warrant allowing conversion of each share to a $62 senior debenture in the event of a hostile takeover attempt; the move would overburden the company with debt. Icahn said his offer is contingent upon lifting of that right and the shareholders’ rejection of the Phillips recapitalization plan.

Icahn made his remarks upon emerging from a meeting with the Council of Institutional Investors, a group largely composed of public pension fund executives that was formed by California state Treasurer Jesse M. Unruh.

The council, which currently represents 17 public funds and a small private fund for unionized employees of Mobil Oil Corp., called Thursday’s meeting to hear from major players in the complex battle.

Preceding Icahn into the closed conference room in the offices of New York City Comptroller Harrison J. Goldin were William C. Douce, chairman and chief executive of Phillips; Ivan F. Boesky, a prominent takeover speculator with a large holding in the company, and T. Boone Pickens, the Texas oilman who placed the Bartlesville, Okla.-based company in play late last year by making a tender offer for its stock.

Also appearing at the scene, but not granted a private session with the group, was a delegation of four residents of Bartlesville. They came bearing boxes of heart-shaped cookies emblazoned with the Phillips insignia to dramatize their concern about a takeover of Phillips.

Goldin and Unruh said after the presentations that the group scheduled the session for fact-finding only. The California State Teachers Retirement System and Public Employee Retirement System, two of the largest funds in the country, hold a combined 1.5 million shares, and the New York City fund under Goldin’s jurisdiction has 570,000.

Phillips defused Pickens’ takeover bid last year with a $3.5-billion recapitalization that would turn over at least 34% of the company to an Employee Stock Ownership Plan; Pickens’ stake is to be bought out at $53 per share. Current shareholders were originally to get a package of stock and debt securities that the company maintained would be propped up at a value of $53, but it later “sweetened” the offer to $55.

Icahn’s proxy material includes an alternative valuation by his advisers, Donaldson, Lufkin & Jenrette Securities, that places the package at $43.

Pickens told reporters that members of the council had objected to the terms of his deal, in which he would receive cash for each of his 8.9 million shares while other shareholders would receive a package of securities.

But he bristled at suggestions that his settlement amounted to greenmail. “We made a $380-million investment, we committed ourselves to $25 million in expenses and, in the final analysis, we signed a 15-year standstill agreement,” he said. “No one on the council did that, and for that we thought we deserved a little more.”

He also said he told Phillips that he was willing to accept a package of securities for his shares rather than cash, but the company turned him down. “They said: ‘We do not want you to own securities of this company.’ ”