Newspaper article THE JOURNAL RECORD

Pickens Bets His Money on Mesa

Newspaper article THE JOURNAL RECORD

Pickens Bets His Money on Mesa

Article excerpt

DALLAS _ Remember T. Boone Pickens? He is the corporate raider who said during the 1980s that the best place to prospect for cheap, though mismanaged, oil and natural gas reserves was on Wall Street. His intended victims included Phillips Petroleum Co. of Bartlesville, a failed attempt from which he reaped millions in profits.

Well, he's back. But this time, he's saying that the best bargain in natural gas is the stock of his own company, Mesa Inc.

None of his competitors have such high, dependable reserves of natural gas with so low a stock price, he said at the company's annual meeting Tuesday in Dallas. His own recent purchases have raised his Mesa stake to 7 percent, his highest in 25 years.

And he points to an influx of what he says is smart money including Fidelity Investment's 13 percent stake, George Soros' 5 percent share and Fayez Sarofim's 2 percent stake.

Pickens, Mesa's chairman and chief executive, is also trying to reinvent both the car and the gas station. A Mesa Natural gas station is set to open in August at the Phoenix airport, with Los Angeles and Dallas stations under discussion.

Pickens, after laying low for a few years, has several reasons for promoting his company's stock so fervently. Besides giving him large direct gains, a stock price higher than Tuesday's close of $6.125 could help him pay off debt and finance renewed exploration and development.

Smaller investors, with less appetite for risky natural gas vehicles _ on the stock exchange or the streets _ might still hesitate. With $1.2 billion in long-term debt, Mesa's balance sheet also still smacks of the 1980s.

Just a year ago, Pickens was threatening to have Mesa file for bankruptcy, which usually wipes out the stockholders.

Pickens, it seems, has gone through the same cycle as many a celebrity _ Michael Jackson and now, perhaps, Madonna _ whose reputation is inflated to mythic proportions, then punctured, shredded and burned.

It was all too easy years ago to cheer the attacks by Pickens on the managers of Gulf, Phillips, Citgo and complacent corporate chiefs more generally. His efforts in Japan were laudable.

Now he admits that he bet wrong on natural gas prices in the late 1980's, borrowing to buy more properties and giving too much cash back to his investors.

And it did his reputation as a loud champion of shareholder rights no good that he had paid himself tens of millions of dollars in management and transaction fees by the time he quit paying his outraged investors dividends or their equivalent in 1990.

Even though Mesa's debt payments mean continued losses, Pickens still draws substantial compensation.

In an interview Tuesday, he said there would be losses of $17 million for the first quarter and $75 million to $85 million likely for the year. …

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