Holmes a Court Sells Icahn Half His Stake in Texaco
Trans World Airlines Chairman Carl Icahn surprised Wall Street today by announcing that he will buy 12 million shares of troubled oil giant Texaco Inc. from Australian investor Robert Holmes a Court for $348 million.
Holmes a Court will likely take a loss of about $100 million on the sale. The deal also will give Icahn the voting rights of Holmes a Court’s remaining shares in Texaco, making TWA the biggest single shareholder in the company.
The move by Icahn, a wily takeover strategist who has gone after other big companies, raised questions about his ultimate plans for Texaco. Its stock jumped $1.75 a share to $30.25 in early trading on the New York Stock Exchange. TWA stock rose 75 cents a share to $18.87 1/2.
Icahn’s move also further complicated Texaco’s longstanding multibillion-dollar legal battle with Pennzoil Inc., which Texaco claims forced it into Chapter 11 federal bankruptcy protection seven months ago.
Third-Largest Company
Texaco, based in White Plains, N.Y., is the country’s third-largest oil company with $31.61 billion in revenues last year.
For Holmes a Court, Australia’s wealthiest financier whose riches were slashed by the Oct. 19 worldwide stock crash, the deal provides a big infusion of cash to help him service heavy debts.
According to some estimates, Holmes a Court lost more than $600 million in paper losses on the companies he controls.
For Icahn, whose plans to take TWA private also were blunted by the stock crash, the deal provides an immediate way for him to put the airline’s large amount of cash to use.
Options for Remaining Stock
TWA said in a statement that it had contracted to buy 12 million shares of Texaco stock from Holmes a Court’s Bell Resources Ltd. and its affiliates for $29 a share. Holmes a Court bought his Texaco stock at an average of $37 a share after the company sought bankruptcy court protection.
In addition, TWA said it had voting rights and options to buy Holmes a Court’s remaining 12.09 million Texaco shares.
Icahn’s company already had owned 5.9 million shares of Texaco, which has about 243 million shares outstanding. The agreement announced today would give TWA a 7.3% stake of Texaco. If TWA exercised its option to buy the rest of Holmes a Court’s stock, the airline would have a 12.3% stake.
