Icahn Offers Court Rival Plan for Texaco

NEW YORK — Carl C. Icahn, a major opponent of Texaco’s landmark settlement with Pennzoil, asked a court Tuesday to consider a rival bankruptcy reorganization plan that Texaco immediately denounced as a prelude to a dismantling of the oil company.

Icahn, Texaco’s major stockholder, asked a White Plains, N.Y., bankruptcy court overseeing Texaco’s affairs for permission to file the proposal that would allow him to call a shareholders meeting to vote on replacing Texaco’s board. The plan also would nullify Texaco’s takeover defense measures unless approved by a new vote.

Icahn, who is also chairman of Trans World Airlines, had said in a Dec. 24 filing with the Securities and Exchange Commission that he would take this step. On Tuesday, Icahn amended the filing to include a letter to James W. Kinnear, Texaco’s chief executive, giving details of the proposed plan to take Texaco out of Chapter 11 bankruptcy.

“This is not a plan for all Texaco’s stockholders, it is a self-serving plan for one stockholder--Carl Icahn,” Texaco said in a statement.

“Mr. Icahn is clearly seeking to put himself in a position to reap substantial short-term profits, possibly on the backs of other stockholders who might receive less than full value for their shares.

‘Obstruct Efforts’

“What’s more, his ultimate intention seems to be the dismantling of Texaco, depriving our stockholders of an opportunity for future returns on their investment.”

Some analysts believe that Icahn, who does not sit on the shareholders’ committee despite his status as the company’s largest holder, has been actively seeking to alter Texaco’s bylaws to make it easier for the company to be sold.

Texaco bankruptcy lawyer Harvey Miller previously told Reuters that Icahn was in no legal position to file his own bankruptcy plan and that Icahn may just be trying to push up the stock price and therefore the value of his holdings.

Texaco’s statement said: “The filing of a competing plan of reorganization is an improper and unnecessary interference with the procedure that has been established by the bankruptcy court, and the issues raised by Mr. Icahn have no place in these proceedings.

“His filing will obstruct Texaco’s efforts to seek quick approval of a reorganization plan--and to move forward with a restructuring of the company that would maximize share value and return for all stockholders,” Texaco said.

Texaco, the nation’s third-largest oil company, filed for Chapter 11 bankruptcy protection last April. Under Chapter 11, a company can continue operating while developing a reorganization plan to repay creditors.

Legal Issue

The bankruptcy stemmed from the dispute with Pennzoil over Texaco’s acquisition of Los Angeles-based Getty Oil in 1984. Texas courts held that the acquisition was an unlawful interference with a pact between Pennzoil and Getty and upheld a record $10.3-billion damage award against Texaco.

Texaco and Pennzoil settled the legal battle last month and Texaco’s reorganization plan, filed on Dec. 21, includes a $3-billion accord. The plan requires approval by a two-thirds majority of the Texaco shares voted. A rival document could make acceptance of Texaco’s plan more difficult.

Miller previously told Reuters that Icahn would not be allowed to file a plan because Texaco has the exclusive rights until Jan. 11 to file its own plan. The bankruptcy judge has ruled that the only other plan that would be accepted is one approved by Pennzoil, Texaco’s shareholders and creditors.

Pennzoil is currently committed to Texaco’s plan.

Icahn’s plan would, in effect, allow Icahn to call a special meeting of shareholders to consider replacing the company’s board.

The proposed plan would also do away with staggered terms for Texaco’s board and allow for a majority vote on all measures instead of 80% as now called for under certain provisions. Texaco’s “poison pill” takeover defense would be nullified unless approved by shareholders, according to Tuesday’s filing.

“We will take a look at the proposal and see if it makes sense. We do not have a closed mind on any proposal,” said Dennis O’Dea, counsel to the committee of Texaco’s shareholders in the case.