Icahn to Head Opposition Slate of Directors in Latest Challenge to Texaco’s Plan

Carl C. Icahn, Texaco’s largest shareholder, on Wednesday nominated himself and four allies for election to the embattled oil company’s board, his latest challenge to the firm’s anti-takeover defenses in its bankruptcy reorganization plan.

Icahn’s nomination of an opposition slate, which he suggested that he might do late last month, throws a major new monkey wrench into the already drawn out battle over the future of the nation’s third-largest oil company and its historic $3-billion settlement with Pennzoil Co. Icahn, who also has threatened to boost his 14.8% stake in Texaco, refused to comment Wednesday on rumors that he had purchased more shares.

It also sets up what could be a bitter proxy battle between Icahn and Texaco management to win the hearts and minds of Texaco’s shareholders.

Texaco Chief Executive James W. Kinnear immediately labeled Icahn’s move as “disturbing.” But representatives of some of Texaco’s shareholders indicated a willingness Wednesday to consider the slate nominated by Icahn, chairman of Trans World Airlines.

Meeting Not Scheduled

“We don’t think it’s ever disruptive when a shareholder takes an active interest in the management of a company,” said Dennis O’Dea, an attorney for Texaco’s court-appointed equity committee, which represents shareholders.

Election of all of Icahn’s candidates would not give the New York investor majority control of the board since only five of the 14 seats are up for election at the coming annual meeting. Texaco has yet to schedule the meeting.

But it would give him a major say in the direction of the company, which he said has not been responsive enough to shareholders.

The top five vote getters among director candidates would win election to the board. Texaco management has yet to announce its slate, although one of the candidates is certain to be Texaco Chief Kinnear, whose term expires with the coming annual meeting.

In a statement, Kinnear said: “To divert the attention of the company away from its restructuring and on to his own effort to place his selected representatives on the Texaco board would not be productive.”

Beat Nomination Deadline

Kinnear noted that Icahn “has repeatedly represented that he was not interested in seeking seats on Texaco’s board and that, in his opinion, a divided Texaco board would be ‘ruinous’ to the company.”

Besides Icahn, other members of his slate include Joseph E. Reid, former president, chief executive and chairman of Superior Oil Co.; Edward R. Downe Jr., founder of Downe Communications Inc.; D. Joseph Corr, TWA president, and Alfred D. Kingsley, senior vice president of Icahn Holding Corp. and a TWA director.

Downe is on the board of Bear, Stearns & Co., which reportedly owns a large block of Texaco stock and may be in a position to sell it to Icahn, sources say.

Texaco directors whose terms expire at the next annual meeting include Kinnear; Robert A. Beck, former chairman of Prudential Insurance; Willard C. Butcher, chairman of Chase Manhattan Corp.; Elvis L. Mason, managing partner of Mason Best Co., and Thomas A. Vanderslice, chairman of Apollo Computer Inc.

The nomination of Icahn and his allies--which beat a deadline of Wednesday to submit candidates for directors--raised questions as to what other actions he might take in opposition to Texaco’s reorganization plan. The plan calls for Texaco to pay $3 billion to Pennzoil to settle a $10.3-billion judgment Pennzoil won in the Texas courts. A jury ruled that Texaco’s 1984 acquisition of Getty Oil interfered with an agreement Pennzoil had to acquire part of Getty.

Texaco filed for Chapter 11 reorganization last April to avoid posting a multibillion-dollar bond required for it to pursue a court appeal of the Texas ruling.

Icahn was instrumental in forging that settlement. But he then opposed the reorganization plan as a whole because, among other things, it allowed Texaco to retain its “poison pill” anti-takeover defense for a year after the company emerges from the reorganization.

Poison pills make it prohibitively expensive for a bidder to acquire a company against the wishes of management. Icahn, who wanted the poison pill abolished immediately, lost a bid to offer Texaco shareholders an alternative reorganization plan.

Texaco’s top executives have contended that Icahn is interested only in dismembering the company to boost the value of his stock.

Texaco must win approval of the reorganization plan before it can pursue a broad restructuring plan under which it plans to sell assets and enter into joint ventures for the $3-billion settlement. Approval of the reorganization plan requires a two-thirds vote of outstanding shares. Voting is scheduled to be completed by March 22.

Denies Sale of USX Stake

Icahn also refused to comment Wednesday on widespread rumors that he was boosting his stake in the oil giant--a possibility that he raised in a Securities and Exchange Commission filing in late January. He also refused to comment on speculation that he would join with Royal Dutch Petroleum Corp. to buy Texaco.

He did, however, deny speculation that he was selling all or part of his 11.4% stake in USX Corp. to raise funds for more purchases of Texaco shares.

Texaco stock closed up $1.25 share at $38.25 on Wednesday, with 1.56 million shares traded. It was the 13th most-active stock on the Big Board.

Shareholder representatives said Wednesday that they were open to the idea of an opposition slate.

“The ball’s in Carl’s court,” said O’Dea, the attorney representing the shareholders committee. He urged Icahn to make public pronouncements about “what his candidates will contribute to the future of the business in making it more profitable and successful.”

Steven H. Felderstein, a bankruptcy attorney representing California Public Employees Retirement System, a large pension fund and large Texaco shareholder, said the fund “would review (the Icahn slate) as we would review any other slate of directors put up for a shareholders meeting.”