LOS ANGELES, DEC. 3 -- Lockheed Corp. rejected today a $1.6 billion takeover offer from its largest shareholder, Harold Simmons, saying it involved too much debt, particularly in the current tight credit market.

"The major disruptions associated with pursuing this highly leveraged transaction, without a high probability of success, would be detrimental to all Lockheed shareholders," Lockheed Chairman Dan Tellep said in a letter to Simmons.

Simmons, a Texas billionaire who owns 19.8 percent of Lockheed stock, had proposed to turn Lockheed into a private company. He lost a battle to take control of Lockheed's board last March, but won concessions from the company after lining up support from some big institutional shareholders.

Among those was a promise from Tellep to appoint up to three new directors to the board. Lockheed announced four appointments today -- all approved by big shareholders other than Simmons, Tellep said.

"I think we have more than fulfilled the commitment we made at last year's annual meeting," Tellep said in a telephone interview.

Simmons's chief strategist, J. Landis Martin, said that statement and the friendly tone of Tellep's letter were belied by the fact that neither Simmons nor a director of his choosing was among those named. "He didn't come to the 20 percent shareholder on any of these people," Martin said in a telephone interview.

Asked if another fight for the board was likely, Martin said: "We're going consider our options, which would include that."

Wall Street had expected Lockheed to reject the offer. Lockheed shares fell 37 1/2 cents to $30.25 in New York Stock Exchange trading today.

Through his NL Industries, Simmons had offered $40 a share for the Lockheed stock he doesn't already own. He said he would put up $400 million in cash.