Hunts Offer Settlement in Placid Oil Debt Fight

The Hunt brothers’ Texas oil operation has offered to pay $803.5 million to settle a two-year court battle between Hunt companies and banks that loaned them $1.5 billion, according to company officials.

The offer by Placid Oil Co., owned by Hunt trust estates, includes cash repayments of $663.5 million over the next two months. The Hunts also would pay the banks $140 million from Placid production revenues within seven years, the officials said during the weekend.

The plan--subject to approval by federal bankruptcy court, the IRS and major creditor groups--nearly would complete the settlement of the case and would remove Placid from bankruptcy protection.

Late in June, the Hunt trusts and bank creditors agreed on a settlement to resolve issues surrounding $760 million in loans to their Penrod Drilling Co.

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 banks since have been dropped from the case.

The suit sought $14 million in damages, alleging the banks 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.

The reorganization plan proposed for Placid calls for sale of the Hunt brothers’ interests in the 60-story Thanksgiving Tower, a downtown Dallas office building, and disposal of Hunt production properties in Louisiana, transactions that are completed or pending.

Hunt attorney Henry Simon said one obstacle to concluding the settlement was the negotiation under way in the Netherlands for a loan of about $245 million, to be secured by Placid International Oil, the Hunts’ North Sea unit.

The Hunts already have paid $213.5 million of the proposed $663.5 million cash settlement from funds raised by Placid operations, as part of cash collateral pacts with lenders.