Canada’s Opposition Party Wants Amoco Bid Stopped

The political opposition blasted the planned Amoco takeover of debt-ridden Dome Petroleum as a “black day for Canada” and urged the government Monday to block the sale.

However, the Conservative government headed by Prime Minister Brian Mulroney welcomed the prospect of solving Dome’s six-year debt crisis, and oil analysts forecast the deal would go through.

Officials from Canada’s Energy Department met with Amoco representatives in Calgary on Sunday to outline federal takeover requirements. Afterward, the government issued a release saying it “feels the ball is in Amoco’s court but also feels it is good for Western Canada that the Dome issue is being resolved.”

But the $3.8-billion offer from Amoco Canada, a unit of Chicago-based Amoco, presented Mulroney with a dilemma.

Government policy on takeovers is to keep profitable firms in Canadian hands but to allow the sale of debt-ridden companies.

Engaged in trade talks with the United States and anxious to aid the slumping oil business, the government seemed unlikely to intervene if Dome creditors and shareholders accept Amoco’s offer.

Heavy U.S. Investment

However, sovereignty is a sensitive topic with Canadians. The Conservatives took credit when Canadians acquired 50% of the domestic oil and gas industry two years ago, through a private purchase of Gulf Canada from U.S.-based Chevron.

Amoco’s purchase of Calgary-based Dome Petroleum, Canada’s third-largest oil producer and second-biggest natural gas producer, would reduce Canadian control of the industry to 40%.

The United States already accounts for 75% of foreign investment in Canada, most recently estimated at $93 billion.

Opposition New Democratic Party leader Ed Broadbent termed Saturday’s deal “a black day for Canada” and urged the government to assist an earlier bidder, TransCanada Pipelines Ltd., to find a way of matching Amoco’s offer.

The Liberal Party also called for a thorough search for a Canadian buyer.

The government was saved from direct attack because of a week-long parliamentary Easter recess.

TransCanada President Gerald Maier said his company would improve its initial bid of $3.2 billion.

“We intend to pursue every avenue open to us to acquire Dome’s assets,” he said in a news release.

Those assets total $3.7 billion and include 15 million acres of land with potential oil and gas reserves.

But any buyer also has to deal with the company’s debts of $4.78 billion, accumulated through untimely expansion such as the 1981 purchase of Hudson’s Bay Oil & Gas from Conoco Ltd. of Houston.

Joint Venture Proposed

Dome’s 1986 losses of $1.6 billion were the highest for a Canadian private firm.

Broadbent suggested that state-owned Petro-Canada form a joint venture with TransCanada to match Amoco’s bid, and TransCanada said the idea was workable.

Another joint bid from Imperial Oil Ltd. of Toronto and Exxon of New York was valued at about $3.3 billion.

“No other oil producing country in the world would tolerate this amount of foreign ownership,” said Nelson Riis, a New Democratic member of Parliament. But Hans Maciej, technical director of the Canadian Petroleum Assn., forecast government approval for the Amoco sale.

Maciej said 60% to 70% of Dome shares are already foreign-owned. “Dome has not been a Canadian-owned company for years. And if we’re talking about mineral rights, they are owned and controlled by the provincial and federal governments.”