Word: fu
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...ball was in CNOOC's court, and Fu, by all accounts, was confident as his board gathered in Hong Kong. He did not see the rebellion coming, says a banker close to CNOOC. Three key outside directors?former Shell Chemicals CEO Evert Henkes, former Swiss ambassador Schurtenberger, and Courtis of Goldman Sachs?all raised pointed questions at the meeting. According to sources with knowledge of the meeting, Schurtenberger?presciently, as it turned out?questioned whether the company was prepared for what was likely to be a hostile U.S. political reaction to the deal. Henkes wondered about the debt load that...
...meeting was civil?"no one was shouting or pounding the table," says one attendee?but as the questions mounted, it was clear that Fu did not have the board's backing. At least not yet. On April 1 he called Williamson, telling him he needed to do a bit more work with his board but that CNOOC would still make a formal bid in time for another Unocal board meeting the following day. He was mistaken. Schurtenberger, privately, was seething. "For him it was a trust issue," says a friend of his. "Beyond all the questions about strategy or debt...
...directors told Fu that they would not back the bid unless they were given more time to study it. Fu agreed, and had to phone Williamson back on April 2 and climb down, telling the Unocal CEO that CNOOC would not be coming forth with an offer that day after all. "That couldn't have been an easy call to make," says a source close to Fu. "It was like calling off a wedding at the last minute, with all the guests in church...
...Meanwhile, at Courtis' urging, CNOOC's board insisted on hiring an outside investment bank?NM Rothschild & Sons?and an energy consulting firm to do their own independent evaluation of the deal, in the hope that the board and Fu might eventually find some common ground. But Schurtenberger wasn't going to stick around for the results. On April 4, he submitted his resignation from the board in writing, citing health reasons. (He has had prostate cancer for many years.) When Courtis failed to appear on the dais at the annual shareholders' meeting the next month in Hong Kong, it caused...
...independent reports came in. One source describes their findings as "explanatory for the most part, not strongly endorsing a deal, but not entirely negative, either." Fu put the matter to the board again. Courtis, who had not resigned, was now in a difficult position. Advisers to CNOOC have said he still had reservations about the deal. But his employer, Goldman Sachs, had been hired by CNOOC as its investment adviser and stood to reap a significant reward for its efforts only if the deal went through. When it came time for another board vote, Courtis recused himself. Henkes, critically...