Icahn Profits by Shifting Oil Holdings From TWA to ACF
Trans World Airlines said Wednesday that it was selling half of its Texaco and Pennzoil holdings to ACF Industries for a $30-million profit, in a shuffling of assets between two companies controlled by TWA Chairman Carl C. Icahn.
TWA said the move would spread its risk for holding the investments to other entities and strengthen TWA for any role it decides to take with Texaco.
The company said “ACF’s financial resources also will aid TWA in the purchase of Robert Holmes a Court’s remaining 12 million shares of Texaco, should they be offered under TWA’s right of first refusal.”
TWA arranged to buy 12 million shares of Texaco stock last month from Australian investor Holmes a Court and gained voting rights and the right of first refusal to his remaining 12 million shares.
George Friesen, a securities analyst at Dean Witter Reynolds, said of Icahn: “He’s reshuffling the deck, keeping his options open and not bailing out.”
TWA said ACF’s capital will significantly strengthen TWA if it involves itself further with Texaco. ACF is a rail car concern owned by Icahn that he uses as an investment vehicle.
Airline analyst Louis Marckesano of Janney Montgomery Scott Inc. said the gain will come during the winter season when international traffic important to TWA falls off.
With the addition of shares already bought in the open market, Icahn controls a 12.3% voting stake in Texaco. As part of the sale to ACF, TWA said ACF will be required to buy 50% of any Texaco shares purchased by TWA under its right of first refusal.
