Unocal Files Antitrust Suit to Block Pickens

Trying to block a takeover attempt by Texas oilman T. Boone Pickens, Unocal filed an antitrust suit Thursday against Pickens and his associates, claiming that their six bids for oil companies were part of a conspiracy to “cripple” competitors in oil and gas exploration.

The civil lawsuit, filed in U.S. District Court in Lafayette, La., alleges that Pickens and others have attempted takeovers with the intention of increasing the debt load of the target companies.

The takeover bids and higher indebtedness “impair competitors’ ability to make expenditures for oil and gas exploration, and, at the same time, generate funds for Mesa and its co-conspirators that can be used to exploit opportunities for exploration,” the suit said.

“It is on long-term spending for exploration and development that an oil company’s long-term success depends,” the suit said. “If a company fails to replace its reserves with newly found oil and gas discoveries, it enters into a slow process of liquidation.”

The lawsuit names Pickens; his partners, Texas oilmen Jack Brown and Cyril Wagner; Pickens’ company, Mesa Petroleum of Amarillo, Tex.; Mesa Partners II, the investor group composed of Mesa Petroleum, Brown and Wagner that is trying to buy a controlling interest in Unocal, and subsidiaries of Mesa Petroleum and Mesa Partners.

The Pickens group previously has tried to take over or restructure Cities Service, General American Oil of Texas, Superior Oil, Gulf Oil and Phillips Petroleum.

Mesa Partners, which owns 13.6% of Unocal stock, on Monday launched a $54-per-share offer to buy 64 million shares of Unocal, parent of Los Angeles-based Union Oil, the nation’s 12th-largest oil company.

If the offer is successful, Mesa would own slightly more than 50% of Unocal’s 173.9 million shares outstanding. Mesa has said it then would exchange each remaining Unocal share for securities worth $54.

Unocal’s board hasn’t formally responded to the offer, but Thursday’s lawsuit seeks general injunctive relief.

The suit asks the court to restrain Pickens and others “from continuing unlawfully on a course of conduct with respect to Unocal that will impair Unocal’s ability to compete in oil and gas exploration and production and in the research and development of alternative energy sources.”

“This tender offer, whether or not successful, creates a substantial likelihood that Unocal will suffer a great increase in debt,” the suit said. “Any significant increase in Unocal’s debt would directly result in a significant reduction in Union’s ability to engage in exploration for oil and gas.”

The suit was filed in Louisiana because Unocal and Mesa have operations there and because the alleged reduction of competition occurred in oil and gas exploration in the Gulf of Mexico, a Unocal lawyer said.

A Mesa spokesman said he had not seen the lawsuit and therefore couldn’t comment.

“Every legal maneuver that Unocal’s attorneys can think of to delay and impede Boone Pickens is going to be trotted forth,” said Herb Hart, an oil industry analyst with S. G. Warburg, Rowe & Pitman, Akroyd Inc. of San Francisco.

Unocal already has sued the Pickens group alleging violations of securities laws.

Unocal also sued its longtime banker, Security Pacific, over loans made to Mesa Petroleum and Wagner & Brown. Mesa Partners then sued Unocal for interfering with its banking relationships.

Separately, Unocal filed an amendment to its proxy materials with the Securities and Exchange Commission on Thursday that consisted primarily of a letter to shareholders from Unocal Chairman Fred L. Hartley urging shareholders to vote against a proposal by Pickens to delay the company’s April 29 annual meeting until June.

“Remember, Mr. Pickens’ fiduciary duty is to the Mesa stockholders,” Hartley said. “Any proposal Mr. Pickens might make will be in Mesa’s best interest--but not necessarily yours.”

The letter was dated April 7, the day before Pickens launched his tender offer.

“Mesa does not need to delay your annual meeting to make a proposal to your board of directors,” Hartley said. “Mesa is and has been free to make such a proposal as, if, and when it has one, and you are assured that your board of directors will carefully consider and evaluate any proposal that the board believes is in the interests of all shareholders.”