Chevron Corp., which has been the subject of takeover rumors for weeks, has asked its banks not to lend money to potential raiders, the latest move in what is emerging as a sub rosa anti-takeover strategy.
As part of its attempt to arrange a $5-billion revolving credit line, San Francisco-based Chevron is seeking assurances that its banks will not lend to outsiders buying up Chevron shares, according to sources close to the bank talks.
Chevron spokesman Larry Shushan declined to comment, as did officials of many of Chevron's banks.
The energy company has steadfastly refused to discuss rumors that it is the target of a takeover or forced restructuring by Pennzoil Co. or other companies, but such speculation has driven Chevron's stock to new highs in weeks of heavy trading.
Despite its unwillingness to discuss possible takeover threats, the company has taken steps to deal with them. Last week, Chevron announced the creation of a $1-billion employee stock ownership plan that would raise the percentage of shares in employee hands to 16% from 11%, which, under Delaware law, would allow them to block a takeover. Chevron is incorporated in Delaware.
On Tuesday, a banker for one of Chevron's foreign-based lenders called Chevron's request for assurances "highly unusual" but said in an interview that many of the energy company's lenders would probably agree to it.
"Maybe not some of the American money center banks, but certainly the European and Asian banks probably will," added the banker, who asked not to be identified.
The banker said the request is still under negotiation. Chevron is trying to line up the $5-billion line of credit for "general corporate purposes," which would include financing a war chest against raiders, the banker said. Chevron has business relationships with about 30 banks.
The trade journal American Banker reported that banks expected to take part in the credit line include the Long Term Credit Bank of Japan, Bank of Nova Scotia and Royal Bank of Canada.
Despite Chevron's anti-takeover moves, many analysts and investors continue to discount the possibility of a serious bid for the massive oil company, a bid that could cost as much as $35 billion. Despite weeks of rumors, no sizable new investor has emerged.