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February 2, 1994
Dear Tesoro Stockholder:
The Tesoro Annual Meeting on February 9, 1994 is only a few days
away. This meeting is very important since a vote will be taken
to reclassify 1,319,536 shares of $2.16 Cumulative Convertible
Preferred Stock, including unpaid dividends, into approximately
6,465,859 shares of Common Stock and to approve amendments to our
Company's Certificate of Incorporation.
THIS RECAPITALIZATION WILL HELP TO DETERMINE TESORO'S FUTURE.
EVEN IF YOU HAVE SOLD SOME OR ALL OF YOUR SHARES, YOU, AS THE
RECORD DATE HOLDER, ARE ENTITLED TO VOTE. WE STRONGLY URGE YOU
TO REVIEW THE PROXY MATERIALS PREVIOUSLY SENT YOU AND THE
FOLLOWING INFORMATION AND THEN EXERCISE YOUR VOTING RIGHTS.
Consider:
* Your Directors have unanimously approved the
recapitalization. The Company has obtained an opinion
from a nationally recognized investment bank that as of
December 30, 1993, the recapitalization's terms are
fair from a financial point of view to the holders of
the $2.16 Preferred Stock and Common Stock.
* The Company has entered into an agreement in principle
with Croyden Associates to settle a class action
lawsuit challenging the recapitalization.
* Assuming consummation of the reclassification and the
related exchange offer for the Company's 12 3/4%
Debentures, on a pro forma basis at September 30, 1993:
* BOOK VALUE PER COMMON SHARE WOULD INCREASE
APPROXIMATELY 247%, FROM $.80 TO $2.78.
* LONG TERM DEBT AND REDEEMABLE PREFERRED STOCK
WOULD BE REDUCED FROM $257 MILLION TO $186
MILLION.
* COMMON STOCK AND OTHER STOCKHOLDERS' EQUITY
WOULD INCREASE FROM $44 MILLION TO $120
MILLION.
* On January 31, 1994, the Common Stock and $2.16
Preferred Stock closed at $10.625 and $50.00
respectively.
THE RECLASSIFICATION IS AN IMPORTANT MATTER FOR THE FUTURE OF
TESORO. WE STRONGLY URGE YOU TO VOTE IN FAVOR OF ALL PROPOSALS
BY SIGNING, DATING AND RETURNING THE ENCLOSED PROXY CARD TODAY.
Sincerely,
Tesoro Petroleum Corporation
