NEW YORK, DEC. 17 -- Texaco Inc. and Pennzoil Co. appeared tonight to be closer to an agreement that would resolve their multibillion-dollar dispute and get Texaco out of bankruptcy court, officials said.
"We believe we have reached a substantive agreement with not just Pennzoil, but with all parties," said Wilbur Ross, adviser to a committee representing Texaco shareholders.
He said the committee expected that a compromise plan sanctioned by Texaco would be filed for a hearing before U.S. Bankruptcy Court Judge Howard Schwartzberg "if not tomorrow, within a couple of days."
A Pennzoil spokesman was more cautious, saying that negotiations were continuing tonight. "We're fairly optimistic that a plan will be filed," spokesman Robert Harper said. "We are very hopeful that all the parties will be in agreement with the plan."
A compromise could end the historic feud between the two companies that began nearly three years ago when Texaco bought Getty Oil Co., spoiling Pennzoil's plans to buy part of Getty. Pennzoil sued Texaco for damages and won a record judgment from a Texas jury that now stands at $10.3 billion.
Texaco's board was said to be meeting tonight. A spokesman declined to comment.
Texaco filed for protection from creditors under Chapter 11 of the federal bankruptcy code in April to avoid having to post a potentially ruinous security bond equal to the Pennzoil judgment. In the past week, attention has been focused on a proposal under which Texaco would pay Pennzoil $3.001 billion to settle the judgment and another $2 billion for trade-creditor debt, interest payments and other obligations.
The plan also contained elements proposed by the two committees that had drawn fire from Texaco's management and from financier Carl C. Icahn, Texaco's largest shareholder.
Texaco, which objected to certain provisions, devised a counterproposal containing terms that, if approved by shareholders, would keep the case in court for some time -- keeping Pennzoil from getting any money.
Ross said the new compromise plan had eliminated or modified controversial areas.
One consisted of covenants that the creditors committee wanted, limiting the ability to borrow money. This, it felt, would prevent the management from undertaking financing for post-bankruptcy restructuring, thereby weakening the value of outstanding debt. "That's out," Ross said.
The committee also dropped its demands that the company drop certain antitakeover provisions in its charter, and that Texaco expand its board to include 12 new directors chosen by the shareholders committee. Texaco objected to both provisions.
In the new agreement, Ross said, the committee asks the company to allow shareholders to vote on the antitakeover provisions.
Dennis O'Dea, an attorney for the group, said the proposal was discussed in meetings today with Texaco, Icahn, Pennzoil Chairman J. Hugh Liedtke, and representives of the creditors committee. "Everyone more or less reached the conclusion that there's room to make a deal on all the substantive issues," he said.