Occidental Petroleum to Sell Southland Corp. Stake

Occidental Petroleum said Thursday that it plans to sell its 20% stake in Dallas-based Southland Corp., operator of 7-Eleven markets, in a deal valued at about $394 million.

Chairman and Chief Executive Armand Hammer said Los Angeles-based Occidental is selling the Southland stock as part of its efforts to concentrate on oil and gas exploration, chemicals, agribusiness and coal.

As part of a two-tier arrangement designed to spread out its cash flow over a longer period, Occidental said it would sell 9.5 million warrants later this month, each of which could be used to purchase one share of stock.

Occidental said the warrants could be converted into stock next July for $30 a share. (A warrant is a security that gives the purchaser the right to buy stock at a fixed price on a fixed date. It is usually sold at some fraction of the price of a common share.) Occidental said that the combined cost of the warrant issue price and the stock is expected to approximate the market price of Southland shares. Southland closed Thursday at $41.75.

Occidental acquired its stake in Southland in August, 1983, when it sold the Dallas company the refining, marketing and transportation operations of Cities Service Co. of Tulsa, Okla. Southland paid Occidental $575 million and issued it 9.35 million shares valued at the time at $258 million for the Cities Services businesses. Occidental purchased another 150,000 on the open market to keep its ownership stake at 20% as the amount of Southland stock outstanding increased.

A Southland spokesman said the company wasn’t interested in buying back the stock from Occidental since it needed its money to finance convenience store expansion.