Texaco Sets Out Solvency Plans

Texaco Inc. said today it will borrow $3.4 billion and use $2.2 billion of cash reserves to pay its obligations, including settlement of its lawsuit with Pennzoil Co., and eventually emerge from bankruptcy.

Texaco’s plans, which include a reorganization, were disclosed in a statement filed as part of its bankruptcy proceedings. If the bankruptcy court and shareholders approve, Texaco should be able to emerge from bankruptcy by spring, it said.

The report was important because it revealed how Texaco, the nation’s eighth largest industrial company and third-largest U.S. oil company at the end of 1986, plans to raise enough money to put the financial nightmare behind it caused by the legal dispute with Pennzoil.