Holmes a Court Raises Stake in Texaco to 7.44%
Australian investor Robert Holmes a Court disclosed Wednesday that an investor group he heads has raised its stake in Texaco to 7.44% from 6.4% and that he has been invited to serve on a panel of Texaco stockholders that is expected to be a powerful force in the oil firm’s bankruptcy proceedings.
In a filing with the Securities and Exchange Commission, his Bell Group of Perth, Australia, said it now owns 18,040,300 Texaco shares after purchasing 2,533,000 shares between May 20 and July 2 at prices ranging from $36.375 to $41 a share.
The group, which is Texaco’s largest shareholder, disclosed May 20 that it had acquired 15,507,300 Texaco shares for an average price of $34.90 a share, strictly as an investment.
Texaco noted in a statement issued after the new purchases were made public Wednesday that the most recent filing made no change in that stated investment intention. Nor have there been any discussions between Texaco and Holmes a Court.
Nevertheless, because he is a seasoned corporate raider, Holmes a Court is thought by some investors to be positioning himself for a takeover battle with the nation’s third-largest oil company.
That view was reflected in the company’s stock Wednesday. Texaco was the second-most active issue in composite trading on the New York Stock Exchange, with about 4.22 million shares changing hands. It finished the day at $45.25 a share, up 50 cents from Tuesday’s close.
Wall Street analysts, however, continued to predict Wednesday that Holmes a Court will steer clear of any attempt to take over the company and will simply try to make money from his investment. Many have noted all along that his earlier forays have ended not in takeovers but in “greenmail,” in which a company repurchases an investor’s stake at a premium.
Nevertheless, as the largest shareholder of a company in bankruptcy reorganization, he could still play an important role in shaping Texaco’s future.
Texaco turned to the bankruptcy courts April 12 as a haven from its legal setbacks with Pennzoil, which a Texas jury awarded more than $10 billion in 1985 after deciding that Texaco wrongly interfered with Pennzoil’s attempt to acquire Getty Oil the year before.
As with most large bankruptcy cases, a committee of shareholders is being formed to help advise the bankruptcy trustee on the company’s reorganization. Holmes a Court said he had been invited by the trustee, Harold D. Jones, to serve on this panel but hasn’t decided whether to accept the invitation.
Other large Texaco shareholders also have been solicited and several have turned down the request, according to sources close to the bankruptcy proceedings. These rejections are largely responsible for the delay in forming a shareholders committee, which was expected to have been impaneled weeks ago.
Jones said Wednesday that he hopes to appoint the panel by next week.
In most corporate bankruptcies, it is the committee of creditors that plays the most significant advisory role because the key issue is what percentage of the debts will be repaid. And, in fact, the two creditors committees in the Texaco case have taken an active role in trying to facilitate a settlement between Texaco and Pennzoil.
But, unlike most companies in bankruptcy, Texaco is solvent, so shareholder issues such as renewed dividend payments become more important.
“That means this shareholder committee is going to be a force to be reckoned with,” said a lawyer who has overseen dozens of corporate bankruptcies. “The delay in setting it up has probably been a setback to getting this case over with.”
Despite persistent rumors of an impending settlement between the two firms--rumors that have sparked unusually heavy trading in both companies’ stock all week--sources for both sides continue to insist that there are no “meaningful negotiations” under way.
