Hunts Reported Near Accord With 18 Banks on Placid Oil Co. Debt

The billionaire Hunt brothers, who have settled a $714-million debt for Penrod Drilling Co., are on the verge of settling a sister company’s $704-million debt with 18 of the world’s largest banks, a Hunt Energy Corp. vice president said.

The $704-million debt is against Placid Oil Co., which is being reorganized under Chapter 11 of the U.S. Bankruptcy Code.

The proposed Penrod settlement filed Thursday with U.S. Bankruptcy Judge Harold Abramson would resolve all issues surrounding about $760 million in loans to Penrod Drilling, while bringing the Hunt family trusts that run Penrod out of Chapter 11 bankruptcy protection. The proposal must be approved by the bankruptcy court.

In addition, Hunt Energy Corp. Vice President Tom Whitaker said, the reorganization plan for Placid is “just around the corner.”

Penrod, the world’s biggest independent offshore oil-drilling company, and Placid Oil sued 23 of their lenders for fraud and misrepresentation in 1986 after defaulting on $1.5 billion in bank loans. Two of the banks since have been dropped from the case.

Consensual Proposal

The suit sought $14 million in damages, alleging that the banks--one group of which had sued to recover $760 million in past due loans to Penrod--conspired to drive Penrod and Placid out of business by forcing them to agree to an unreasonable payment schedule while offering their competitors more favorable terms.

In August, 1986, the trust estates of William Herbert Hunt, Nelson Bunker Hunt and Lamar Hunt filed for Chapter 11 bankruptcy protection for the trust partnership that owns Penrod Drilling. Penrod itself was not under bankruptcy court protection.

Under the consensual proposal filed Thursday, bank creditors would receive a $50-million payment and a $500-million secured note from Penrod Drilling, plus a 50% interest in the company, which is subject to repurchase by the trust estates.

Some trust real estate will be transferred to the banks, subject to a $200-million purchase option.

The trust estates would be released from prior liability to their bank creditors when the reorganization is complete. Also, the banks, trust estates and individual members of the Hunt family would drop claims and counter-claims stemming from the bank loans.

The proposed settlement has been approved by the group of banks led by First Chicago, Citicorp and Manufacturers Hanover Trust Co.

No Payment Schedule

A Hunt estates statement said: “When approved by the court, this plan by the trust estates and their bank creditors settles all issues surrounding the bank loans to Penrod Drilling Corp.”

There had been speculation that any settlement might require William Herbert Hunt, manager for the Penrod partners, to relinquish his power in Penrod’s daily operations. However, Whitaker said the agreement would not affect Hunt’s position or the day-to-day operations of Penrod.

Whitaker said there was no timetable to the repayment plan.