Major Investors Warn Debt-Plagued Mesa

Marvin Davis, the Los Angeles financier, and Dennis Washington, a long-disgruntled Montana investor, joined forces Thursday to press Texas oilman Boone Pickens to take drastic action to heal Mesa Inc., his Dallas-based oil and gas concern.

Oil and entertainment billionaire Davis, who owns 3.9% of Mesa’s stock, and Washington, an industrialist with 5.5%, sent Mesa’s directors a letter stating that “the board must evaluate all alternatives available to the company to maximize value for all shareholders . . . including a possible sale of the company or merger or other business combination.”

Pickens’ problem is $1.2 billion in company debt, largely stemming from acquisition of natural gas fields in the false expectation that gas prices would rise. Ironically for a legendary corporate raider who attacked companies under the rubric of defending shareholder value, Pickens blames the debt on shareholder dividends.

Pickens became a name around Los Angeles in 1985 when he waged a bruising but unsuccessful takeover attempt of Los Angeles-based Unocal Corp., which left Unocal more than $6 billion in debt.

Pickens’ most recent setback was withdrawing from the auction block--for lack of a decent offer--13% of Mesa’s holdings in the massive Hugoton gas field in Kansas. Pickens had hoped to raise cash to solve the near-term debt crisis.

Now Davis and Washington have asked the Mesa board to promptly form a committee of independent directors, financial and legal advisers to re-evaluate the merchandise in Pickens’ old store. If not, they threaten to try to call a special board meeting to elect new members who will.