NEW YORK, JAN. 9 -- Texaco Inc. said today it will take fourth-quarter writedowns totaling $4.9 billion and begin a restructuring plan -- including at least $3 billion in asset sales -- as it prepares to emerge from bankruptcy.
The writedowns will include an after-tax charge of $2.8 billion to reflect its recent agreement to pay $3 billion to Pennzoil Co. in return for Pennzoil dropping a $10.3 billion judgment it holds against Texaco.
In a statement from its White Plains, N.Y., headquarters, Texaco also said it would reduce the value of some assets and provide about $2.1 billion in reserves in anticipation of its upcoming restructuring.
Last April, the nation's third-largest oil company filed for protection from its creditors under Chapter 11 of the federal bankruptcy code to avoid having to post a potentially ruinous bond while appealing the judgment held by Pennzoil.
The legal dispute began in 1984, when Texaco bought Getty Oil Co. after Pennzoil believed it had already sealed an agreement to acquire part of Getty. A Houston jury agreed with Pennzoil that Texaco's action was unlawful.
Texaco, Pennzoil and committees representing Texaco's shareholders and creditors filed a reorganization plan incorporating the $3 billion settlement last month.
In today's announcement, James W. Kinnear, Texaco's president, said the restructuring "will focus on a rearrangement and downsizing of refining and marketing assets, permitting the company to concentrate on its more profitable exploration and producing and other activities."
The statement failed to specify particular properties being targeted for disposal or other action, saying only that contacts had already been made with prospective buyers.
But Kinnear said Texaco's goals would be twofold: "enhancement of shareholders' value and restoration of Texaco's financial ratings to an investment grade."
Proceeds from the asset sales "will be used to retire debt and thereby permit the company to achieve a debt-equity ratio that the company has been advised will support investment-grade financial ratings," the statement said.
The remarks were clearly aimed at shareholders, some of whom remained restive despite last month's apparent agreement.
Financier and takeover specialist Carl C. Icahn, Texaco's largest shareholder, with 12.3 percent of the company's stock, has already denounced certain provisions of the plan.
In discussing its restructuring, Texaco said it planned to join with outside parties in setting up one or more joint ventures that would buy "partial interests in refineries and other assets."
Included in the $2.1 billion total writedowns and reserves provision will be about $850 million for writedowns of those properties included in the planned restructuring, along with accompanying inventories.
The total will incorporate an additional $440 million for sales of certain producing properties, including domestic holdings containing crude oil and natural gas reserves totaling about 60 million equivalent barrels for which the company's return "is not satisfactory," it said.