Word: texaco
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...Texaco left itself an escape hatch. Officials said that if a settlement was reached soon or a large reduction of the bond granted, then the company could withdraw or suspend the bankruptcy filing. In other words, Texaco could be using its bankruptcy as the ultimate pressure tactic against Pennzoil. Liedtke flew to New York City on Sunday...
Under Chapter 11 of the federal bankruptcy law, Texaco will be allowed to continue normal business operations. Its cash flow could actually improve because it will still receive sales revenue and yet be afforded relief from interest payments on its $9.1 billion in debts. But it could also lose a great deal of business because of uncertainty surrounding the Pennzoil case. Many of the jobs held by the company's 52,000 employees could be threatened. Moreover, Texaco will be under the strict supervision of a federal court. It will, for example, be forbidden to buy major oil reserves...
...dispute had taken on historic proportions in November 1985, when a Texas jury issued a $10.5 billion judgment against Texaco for inducing Getty Oil to break a merger agreement with Pennzoil. After more than 17 months of intricate legal maneuvers, the battle came down to a test of strength and nerve between resolute executives at two powerful corporations. In the end, neither side was willing to move far enough from its initial negotiating stance to reach an agreement...
...bankruptcy filing is a supreme irony since Texaco would be in robust financial health if it had never tangled with Pennzoil. In the U.S. alone, Texaco has 1.7 billion bbl. of oil reserves, worth $9.6 billion, and 5.l trillion cu. ft. of natural gas with a value of $3.l billion. Before last week, Wall Street analysts had projected Texaco's profits to be more than $650 million for this year and nearly $790 million...
...With Texaco in Chapter 11, Pennzoil could be a loser as well. Instead of having a priority claim to Texaco's riches, the smaller company will have to get in line with all the other creditors of the bankrupt firm. Any payment to Pennzoil will not only be delayed, but might be far less than $10 billion...