Posted on 07/26/2005 12:29:49 AM PDT by Cincinatus' Wife
Buried in the fine print of Unocal's latest filing with regulators is an interesting dissection of the behind-closed-doors dealing that has played out as Chevron and China's CNOOC Ltd. bid against each other for one of this country's oldest oil companies.
According to the filing, Unocal on July 16 almost secured a higher all-cash offer of $69 per share from CNOOC, a subsidiary of government-owned China National Offshore Oil Co.
But the wheels fell off when the national oil company insisted Unocal lobby on CNOOC's behalf before Congress, according to Unocal's updated proxy statement filed with the Securities and Exchange Commission.
The Chinese company also asked Unocal to forget about the $500 million break-up fee to Chevron that CNOOC had originally promised to pay.
Unocal CEO Charles Williamson responded by telling CNOOC Chairman Fu Chengyu he was disappointed the company was trying to reopen negotiations by taking the termination fee off the table and said Unocal was unable to lobby Congress because of agreements entered into with Chevron, according to the filing.
Unocal's filing also sheds more light on CNOOC's government financing, which could act as fuel on the fire for U.S. politicians who claim the Chinese company's offer amounts to a national security threat.
Republicans and Democrats alike, including Chevron's hometown congressman, Rep. Richard Pombo, R-Calif., have pounced on CNOOC, saying it isn't a truly commercial entity.
With a market capitalization of $17 billion, CNOOC needs big financing help to make an $18.5 billion all-cash offer for Unocal. Turns out, some $7 billion of that could come from the Chinese government interest free.
One $4.5 billion loan from CNOOC's government-owned parent company has a 3.5 percent interest rate. But according to Unocal's SEC filings, that interest rate would drop to zero if CNOOC's credit rating dropped below a certain threshold.
Another $2.5 billion loan at zero interest is due to be paid back in two years. According to the filing, if CNOOC can't make that obligation, the payback can be extended up to 30 years interest-free.
Still, some shareholders consider the CNOOC bid better than Chevron's.
According to Bloomberg News, one chief executive of a firm that controls more than 1 million Unocal shares wrote Unocal's board on July 20, the day after Unocal and Chevron announced their new deal. Unocal, he said, has a fiduciary responsibility to shareholders to lobby the U.S. government to approve CNOOC's bid.
ljcook@chron.com
in theory the congress would not be so idiotic as to let the deal go through.
It looks like it's soured.
Yeah, until their stock fell in the dumper any time the Chinese decide to take it all down.
It looks like it's soured.
Let's hope so!
Maybe we sould all buy some stock in it????
under Klin-ton they might have got Unocal for next to NOTHING! (except for the bribe to Bill)
It's an all-cash offer, no stock involved...
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