Newspaper article THE JOURNAL RECORD

Agreement with Icahn to Keep Texaco Energy Leader

Newspaper article THE JOURNAL RECORD

Agreement with Icahn to Keep Texaco Energy Leader

Article excerpt

NEW YORK - Texaco Inc. and its biggest stockholder, Carl Icahn, have reached a truce that Texaco management says will allow the oil giant to focus full attention on remaining a leader in the energy business.

Announcement of the pact with Icahn came Sunday as Texaco took one of the final steps in its massive restructuring program by proposing to pay $1.9 billion in special dividends to shareholders, a step Icahn applauded.

The company said it had signed a standstill agreement with Icahn, who hinted broadly in recent months he might try for a second time to gain control of Texaco or mount a bid for the entire firm. Similar bids failed last year.

``Why fight when management is doing the job for you?'' Icahn said in a telephone interview.

The special dividends include $4 a share in notes, $3 a share in cash and $1 a share in an issue of preferred stock.

Texaco shares fell $4.75 a share to $49.75 in early New York Stock Exchange trading Monday. There had been speculation the stock might decline once Icahn reached his agreement, because it was seen as lessening the chances of a takeover battle that could boost Texaco's price.

The seven-year agreement provides that Icahn will not add to his stake in the oil giant, currently estimated at about 17 percent, and will not launch or support any proxy fights against management.

Under the agreement, Texaco and Icahn agreed to settle pending litigation. Texaco sued Icahn last spring, accusing him of securities law violations.

Icahn, who said he signed the agreement near dawn Sunday after a meeting which began Saturday afternoon, said he felt Texaco management had done well in recent asset sales, particularly the $3.24 billion sale of its Texaco Canada interests.

``I think top management at Texaco during the last year has done a good job in making Texaco leaner and more productive,'' Icahn said in a statement.

He said he also liked the idea that Texaco would put the special dividend and any possible changes in its poison pill defense to a vote of shareholders.

He declined to say whether he planned to sell his Texaco stock, but noted the agreement places limits on how he may do so.

The special dividends, which will be submitted to shareholders for a vote at the annual meeting in May, are part of Texaco's restructuring plan that has seen the company sell about $7 billion in assets since June.

Texaco proposed to pay two special dividends, one of $4 a share in notes and a second of $3 a share in cash and $1 a share in preferred stock, for a total of $8 per share. …

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