Texaco Sues Icahn, Says He and Associates Manipulated Firm’s Stock

NEW YORK —  Texaco Inc. said Tuesday that it has asked a federal court to freeze financier Carl C. Icahn’s ability to use his stock in moves against the oil giant, accusing the takeover specialist of “major violations of securities laws.”

The suit, filed at U.S. District Court in White Plains, N.Y., charges that Icahn and other associates and companies he controls have manipulated the stock market at the expense of other stockholders through “a pattern of deception.”

The suit asks the court for a ruling blocking Icahn from soliciting proxies, acquiring additional Texaco stock or voting the shares he already holds, which amount to 14.8% of Texaco’s 242.8 million outstanding common shares.

In addition, it asks the court to void Icahn’s Feb. 10 filing with Texaco nominating candidates for five board seats coming up for grabs at the company’s June 7 annual meeting in Tulsa, Okla.

There are 14 seats on Texaco’s board, with the next election--for four more seats--due in 1989.

In a one-sentence statement issued at his New York office, Icahn said: “We believe the lawsuit is without merit, and will vigorously defend our right to communicate with other Texaco shareholders.”

Icahn has been an outspoken critic of the company’s management since he began buying up Texaco shares last fall.

In February, he offered to withdraw his slate of directors if the company put itself up for sale at $55 a share or more. Texaco officials refused to do that.

He acquired most of his stake at prices between $29 and $34 per share. In composite trading of New York Stock Exchange-listed issues Tuesday, Texaco closed at $49 per share, down 62.5 cents.

Meanwhile, in White Plains, U.S. District Judge Gerard Goettel scheduled a hearing for all parties at 10 a.m. Thursday.

Icahn’s involvement with Texaco began in the last months of its multibillion-dollar legal battle with Pennzoil Co.

In 1985, a Houston court ruled that Texaco, before buying Getty Oil Co., had improperly interfered with Pennzoil’s bid to acquire part of Getty.

It awarded Pennzoil a judgment that stood at $10.3 billion in April, 1987, when Texaco filed for federal bankruptcy court protection to avoid having to post a similar amount while appealing the Houston judgment.

Late last year, Icahn interjected himself as a mediator between the two companies, which in December, without his participation, agreed on a $3-billion settlement that formed the keystone of a bankruptcy reorganization plan.

Texaco emerged from bankruptcy and paid the $3 billion to Pennzoil last month.

It subsequently increased its original plan to sell $3 billion of assets to $5 billion, mindful of the threat that Icahn might attempt to take over the company in order to sell it off piecemeal to raise the value of his shares.

“Texaco cannot stand by while Carl Icahn misleads its shareholders, manipulates the market for its stock, and continues a pattern of activities aimed at obstructing a prompt and aggressive restructuring,” Texaco said in a statement from its White Plains headquarters.

The company vowed to “take whatever action is necessary to protect the interests of Texaco shareholders.”

The suit charges that Icahn submitted false and misleading filings with the Securities and Exchange Commission for the purpose of deceiving Texaco and its shareholders as to his true intentions regarding the company.