Unocal Corp. yesterday sued its principal lender, Security Pacific National Bank, charging that it breached its responsibilities to the oil company by making loans to a group controlled by corporate raider T. Boone Pickens, enabling the group to buy stock in Unocal.
Unocal, whose principal subsidiary is Union Oil Co., alleged in Los Angeles Superior Court that the bank, which had received much confidential Unocal information during its years as the company's lead bank, "turned around and loaned money to a group intent on taking Unocal over or putting it into play as an acquisition target."
The Unocal suit seeks to enjoin Security Pacific from making loans to Pickens to finance a hostile takeover attempt. A group led by Pickens recently boosted its stake in Unocal to 9.7 percent of the outstanding common stock, calling their purchases an investment, not a takeover bid.
Richard J. Flamson, chairman of Security Pacific Corp. and its subsidiary Security Pacific National Bank, said the Unocal suit is without merit and he "deeply resents the attack on the credibility" of the bank. He denied the "allegation that Security Pacific used any confidential financial information about Union Oil for the benefit of others."
The suit charged that by lending to help finance Pickens' purchases of Unocal, Security Pacific -- the nation's seventh-biggest bank -- was guilty of breaches of contract and financial duty as well as deceit and misrepresentation.
It said Security Pacific lent the Pickens group $185 million -- as its part of a $1.37 billion loan -- to finance purchases of any company the Pickens group designated as a target. The initial target was Phillips Petroleum Co., which the Pickens group dropped as an acquisition target after reaching an agreement with the Oklahoma oil company.
The Unocal suit also said Flamson promised Unocal officials last December the bank would not finance purchases of Unocal stock by Pickens and said Flamson concealed that the banks had given the Pickens group permission to make a "limited," $50 million investment in Unocal.
On Jan. 16, the suit charged, the banks told the Pickens group it could target Unocal stock and the Pickens group began on Jan. 18 to buy Unocal stock "in earnest."