To pay off their silver speculating debts, the Hunt family of Texas is seeking a package of loans bigger than the proposed federal government bailout for Chrysler Corp.
Bankers dealing with the Hunts said yesterday the family has put up oil and natural gas wells worth $3.2 billion as collateral for loans that are expected to total between $1.5 billion and $2 billion.
A special government committee is expected to decide this week on Chrysler's request for a federal guarantee on a $1.5 billion loan.
The Hunts already have a $750 million loan from a group of banks and are completeing details of a second loan package that will total at least $800 million and probably more, the bankers report.
Both loans are being arranged through a group of banks led by First National Bank in Dallas, the Hunts' main bank for many years, and Morgan Guaranty Trust Co. in New York.
The two banks confirmed their role in the Hunt loans yesterday but refused to provide details of the transactions.
The second loan has been negotitated with the approval of Federal Reserve Board Chairman Paul A. Volcker, who for months has been urging banks not to make loans for speculative purposes and to limit credit to consumers.
Volcker and the Hunts have been called to testify about the silver debacle in a series of congressional hearings that start today.
Late yesterday, an attorney for the Hunts asked that they be excused from complying with subpoenas to appear this morning before a subcommittee headed by Rep. Benjamin Rosenthal (D-N.Y.). The Hunts complained that before the subpoena was issued they had agreed to appear voluntarily this Friday before a Senate subcommittee headed by Sen. Donald Stewart (D-Ala.).
Rosenthal responded with a telegram to Texas, warning the lawyers, "If your clients do not appear, the subcommittee will take appropriate action." Rosenthal aides said the Hunts could be cited for contempt of Congress if they fail to appear.
Both Rosenthal and Stewart want to determine why billions of dollars of loans were made available to the Hunts at a time when farmers, home-builders and consumers were unable to borrow money.
The Hunts have borrowed millions from stockbrokers, silver dealers and other companies, who in turn got the money to lend to the Hunts from major banks.
The latest Hunt loans are being made through Placid Oil co. a Texas holding company formed by the late H.L. Hunt, founder of the oil dynasty. Bunker Hunt, Herbert Hunt and their brother Lamar -- owner of the Kansas City Chief's football team -- each owns 22 percent of Placid Oil.
As collateral on the loans, Placid Oil has mortgaged oil and natural gas wells in Louisianna, Mississippi and the Gulf of Mexico worth $3.2 billion sources familiar with the transactions reported yesterday.
The wells secure both an existing $750 million credit line in the Hunts and the so-called "Colcker loan" that still is being negotiated.
The $750 million line of credit to Placid was an unsecured loan until recently, when the banks reportedly demanded collateral. Placid has loaned $400 million of the $750 million to Bunker, Herbert and Lamar Hunt.
Until he was identified yesterday by the Wall Street Journal as a participant in the loans, Lamar Hunt hadn't been known to be involved in his brothers' silver speculating. Whether Lamar has his own silver debts to pay, or was merely helping out his brothers, couldn't be learned. Lamar could not be reached for comment yesterday.