NEW YORK, JAN. 14 -- Any doubts around Occidental Petroleum Corp. that Armand Hammer really is dead were erased today with the announcement of a radical corporate restructuring and an end to some of the late chairman's most cherished policies.
Occidental said it plans to cut its long-term debt of $8.5 billion by 40 percent, in part by selling $3 billion of assets. It will withdraw from unprofitable businesses and slash the long-generous annual dividend on common stock to $1 per share from $2.50. The dividend had been maintained at the steep level at Hammer's insistence, even though it far exceeded Occidental's operating profits in recent years.
The Los Angeles-based company said costs of the restructuring will lead to a $2 billion charge against 1990 fourth-quarter earnings. The restructuring will bring layoffs, but company officials refused to give any indication of how many.
Ray R. Irani, Hammer's successor as chairman and chief executive, announced the changes barely a month after Hammer's death at age 92. In a meeting with securities analysts in New York, Irani said the company will now concentrate on its core businesses of oil, gas and chemicals. Irani confirmed that Occidental wants to sell its 51 percent stake in IBP Inc., one of the nation's largest meat processors.
The new chairman also unveiled plans to divest many of the other far-flung ventures that became a Hammer hallmark. Among $300 million of unprofitable assets up for sale or closure are Occidental's coal mining operation in China, a petrochemical project in the Soviet Union, hotels in Nigeria and Beijing, an oil shale venture, a film production business, Arabian horse breeding, hybrid seed research and a Black Angus cattle operation.
Irani predicted that the restructuring will boost net income by $200 million a year by 1992 and increase annual cash flow by $600 million. Occidental in 1989 reported net income of $285 million, including realization of a one-time, $29 million tax benefit.
The new chairman avoided characterizing the changes as a repudiation of Hammer's policies. But he said: "The need for a change in direction at Oxy is clear."