Unocal Retirement Plan Sues Mesa
The trustee for Unocal’s retirement plan filed suit Friday against Mesa Petroleum Chairman T. Boone Pickens and others charging that they violated securities laws by operating Mesa as an investment company not registered with the Securities and Exchange Commission.
The civil lawsuit filed in federal court in New York alleges that Mesa Petroleum, as an unregistered investment company, has illegally engaged in several activities, such as buying and selling stock through the mail, or engaging in interstate commerce, which would include launching its tender offer for 64 million shares of Los Angeles-based Unocal.
The suit was filed by Northern Trust Co., trustee for Unocal’s retirement plan, on behalf of all shareholders of Mesa Petroleum.
Unocal’s retirement plan owns 20,000 Mesa shares, purchased in October, 1984. Mesa has 67.7 million shares outstanding.
Pickens’ Mesa Partners II investor group started a $54-per-share offer for Unocal on Monday, which, if successful, would give the group a controlling interest in the parent of Union Oil, the nation’s 12th-largest oil company.
Unocal’s board hasn’t formally responded to the offer, but Unocal on Thursday sought to block the bid by filing an antitrust suit against Mesa.
Bruce Schneider, an attorney representing the trustee, declined comment on whether Unocal management had urged Northern Trust to file its lawsuit.
The retirement plan’s suit charges that Mesa Petroleum misled its lenders because it didn’t reveal that it is operating as an investment company, and issued stock options and adopted incentive plans for executives that are illegal for an investment company.
The suit contends that Mesa’s actions will harm Mesa shareholders because the company has exposed itself to criminal penalties, substantial fines and the possible seizure and sale of its assets by the SEC.
The suit asks the court to, among other things, stop Mesa from acting as an investment company or continuing the business of Mesa Partners, which would halt the tender offer for Unocal stock. It also asks to court to declare null and void certain loan and stock transactions and incentive plans.
Mesa Vice President David Batchelder said the lawsuits filed Thursday and Friday “are, at best, without merit.”
“We feel they are a waste of shareholders’ assets,” he said. “If Unocal shareholders demanded that (Unocal Chairman) Mr. (Fred) Hartley pay the cost of these suits himself there would be a lot fewer suits filed.”
Also joining in the latest suit were members of Unocal’s retirement plan committee, which includes Hartley and Kenneth V. Zerda, a resident of Jakarta, Indonesia, who has owned 200 shares of Mesa Petroleum stock since January, 1977.
The suit names Pickens, Mesa Petroleum, Mesa Partners II, Jack Brown and Cyril Wagner, the other partners in Mesa Partners II, and various officers, directors and subsidiaries of Mesa Petroleum.
