Icahn Says He’ll Back Texaco’s Reorganization

Financier Carl C. Icahn, Texaco Inc.’s largest shareholder, said Monday that he would support the company’s plan to emerge from bankruptcy court protection.

He also promised to drop his effort to get himself and four allies elected to Texaco’s board of directors--if its management would agree to put the nation’s third-largest oil company up for sale for a minimum of $55 a share.

In nationwide trading of New York Stock Exchange-listed issues Monday, Texaco’s stock closed at $45.375 a share, unchanged from Friday.

“I am going to vote for the reorganization plan because that’s what the shareholders want,” said Icahn, who controls 14.8% of the oil giant’s stock.

Even so, Icahn said he was still unhappy with what he called Texaco’s “take-it-or-leave-it plan--which shareholders must accept or see the company blown up.”

Icahn, Texaco President James W. Kinnear and others spoke to reporters after appearing before a closed meeting of the Council of Institutional Investors, an organization representing more than 50 pension funds, to discuss Texaco’s bankruptcy reorganization plan.

Kinnear said he had told the investors that Texaco’s efforts to slim down the company--raising cash by selling off its least-profitable assets in some cases, negotiating joint-venture partnerships in others--were being hampered by takeover talk on Wall Street.

“We have found that as we go to these negotiations and go to get bank loans, the very presence of corporate raiders makes it very difficult to get the job done,” Kinnear said. “The banks are terrified. The co-venture partners are concerned.”

Icahn, however, said the “real problem” was that Texaco’s management was not sufficiently accountable to its shareholders.

The White Plains, N.Y.-based company filed for bankruptcy court protection last April to avoid having to post a potentially ruinous bond while appealing a $10.3-billion judgment held against it by Pennzoil Co.

In 1985, a Houston jury awarded the judgment to Pennzoil after finding that Texaco had interfered with Pennzoil’s 1984 attempt to acquire part of Getty Oil Co. in order that Texaco could buy Getty itself.

Texaco’s shareholders have until March 21 to vote on a reorganization plan that would bring the company out of bankruptcy protection and settle its dispute with Pennzoil with a $3-billion cash payment.

Under bankruptcy law, at least two-thirds of the shares voted must support the plan before U.S. Bankruptcy Court Judge Howard Schwartzberg can approve it. Failing that, Schwartzberg could approve it if he deemed the plan fair and equitable, although such an event is seen as unlikely.

Earlier this year, Icahn failed to win Schwartzberg’s permission to let the shareholders vote on a separate plan that was basically the same except that it would strip away Texaco’s anti-takeover defenses.

He subsequently announced that he would run a slate of five candidates--including himself--when the seats come up for a vote at the next meeting, expected to take place in May.

Icahn said Monday that he was not interested in running the company, but that he was “looking to enhance shareholder values” by selling it.