Cities Service Co. and its proposed new parent, Occidental Peteroleum Corp., plan to sell some of their assets to reduce their heavy burden of debt, Cities Service Chairman Charles Waidelich told company employes today at a special meeting.
Waidelich spoke just one day after Occidental Vice President A. Robert Abboud reportedly said it would be "most inappropriate" for Occidental to comment on possible disposal of Cities Service assets.
Waidelich, who would take on the additional post of vice chairman of Occidental if the merger goes through, told about 4,200 employes concerned about the security of their jobs that Cities Service "will remain essentially intact," and its headquarters will stay in Tulsa.
But he added that it may be necessary to sell some assets, "including some in Oxy, in order to reduce the debt of the combined companies. However, these can now be planned and orderly, with units sold as ongoing functional operations providing the best conditions for preserving the interest of employes."
Some analysts have said that the most-readily-salable property is Cities Service Gas Co., a natural-gas-transmission subsidiary. Another potential sale is reported to be Cities Service's big oil refinery at Lake Charles, La.
In an interview prior to the merger agreement, Occidental Chairman Armand Hammer had said "it's possible that we would want to sell off some refining and market operations." Occidental has no marketing operations in the United States.
Under the merger agreement announced Wednesday night, Occidental committed itself to paying about $4.3 billion in cash and securities for Citgo stock.