Texaco Panel, Pennzoil OK $3-Billion Pact

NEW YORK — Pennzoil Co. and a committee representing Texaco Inc. shareholders have agreed on a $3-billion settlement proposal aimed at resolving the long legal fight between the two oil companies and getting Texaco out of bankruptcy reorganization, a Pennzoil spokesman said today.

The settlement plan is less than a third of the $10.3-billion judgment awarded to Pennzoil by a Texas court, which held that Texaco had improperly interfered in a merger between Pennzoil and Getty Oil Co., and acquired Getty itself in 1984.

The settlement, which calls for the money to be paid in cash, would be included in a reorganization plan that could be filed in U.S. Bankruptcy Court next week, spokesman Robert Harper said from Pennzoil’s headquarters in Houston.

However, the proposal would also have to be approved by Texaco creditors before it could be submitted to the court. Their spokesmen could not be reached immediately for comment.

Stock Up on Wall Street

“We think the Texaco creditors committee will also join in the reorganization plan,” Harper said, without amplifying on the point.

At Texaco’s headquarters in White Plains, N.Y., spokeswoman Anita Larsen said she had no immediate comment.

Rumors of a possible settlement proposal had driven up the stock of both companies on Wall Street earlier in the day. After the proposal was confirmed, Texaco’s stock stood at $34.25 a share, up $2.25, while Pennzoil’s stock was at $78.87 1/2, up $5.87 1/2 .

Texaco filed for protection from its creditors under Chapter 11 of the federal bankruptcy code in April to avoid having to post what it considered to be a potentially ruinous security bond while it appealed the $10.3-billion damage judgment.

Earlier this month, U.S. Bankruptcy Court Judge Howard Schwartzberg gave Texaco 40 days to come up with its own reorganization plan.

Plan Expected Next Week

But he said that if Pennzoil and the creditors committee agreed on a plan that included a settlement, he would drop that deadline in order to let Texaco shareholders vote on it.

In a clarification Monday, Schwartzberg expanded his ruling, saying Texaco’s shareholder committee would have to agree on the plan as well.

Harper said he expected that the reorganization plan would be filed toward the end of next week.