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A Proxy Statement, Prospectus and Consent Solicitation dated January 3, 1994
and forms of proxy relating to the 1993 Annual Meeting have been sent to Tesoro
Petroleum Corporation securityholders. The Proxy Statement/Prospectus should be
read before voting or exchanging your securities. All statements herein are
qualified in their entirety by reference to the Proxy/Statement Prospectus and
to the additional and more detailed information contained therein, including
information as to risk factors that securityholders should consider.
TESORO PETROLEUM CORPORATION
A MESSAGE TO SECURITYHOLDERS
12 3/4% SUBORDINATED DEBENTURES DUE MARCH 15, 2001
$2.16 CUMULATIVE CONVERTIBLE PREFERRED STOCK
COMMON STOCK
OFFER TO EXCHANGE 13% EXCHANGE NOTES DUE DECEMBER 1, 2000 FOR UP
TO $54,500,000 AGGREGATE PRINCIPAL AMOUNT OF ITS EXISTING
12 3/4% SUBORDINATED DEBENTURES DUE MARCH 15, 2001
1993 Annual Meeting of Stockholders at which a vote will be taken
to reclassify 1,319,563 shares of $2.16 Cumulative Convertible
Preferred Stock, including accrued and unpaid dividends, into
approximately 6,465,859 shares of Common Stock and to approve
amendments to the Certificate of Incorporation of the Company.
YOU HAVE AN IMPORTANT DECISION TO MAKE. THE EXCHANGE OFFER FOR
THE 12 3/4% DEBENTURES IS SCHEDULED TO EXPIRE ON FEBRUARY 8, 1994
AND THE RECAPITALIZATION WILL BE VOTED ON AT THE ANNUAL MEETING
TO BE HELD ON FEBRUARY 9, 1994.
ONLY THOSE STOCKHOLDERS WHO WERE RECORDHOLDERS AS OF
DECEMBER 15, 1993 ARE ENTITLED TO VOTE AT THE ANNUAL MEETING.
RECENT PURCHASERS MUST RECEIVE A PROXY FROM THE SELLER OR HAVE
THE SELLER VOTE THE PROXY FOR THEM.
Holders of Tesoro securities are being asked to participate in a
Recapitalization which will help determine Tesoro's future. Here
are some things you should know about the proposed
Recapitalization:
1. Holders of the 12 3/4% Subordinated Debentures can
increase their annual current income and improve the
protection of their investment while maintaining 100%
of principal amount by exchanging into the new 13%
Exchange Notes. The 13% Exchange Notes will be senior
debt and will have a higher coupon and earlier final
maturity date than the existing 12 3/4% Subordinated
Debentures.
2. On December 27, 1993, the day before the announcement
of the final Recapitalization terms, the Common Stock
and $2.16 Preferred Stock traded at $5.625 and $21.125,
respectively. On January 21, 1994, the Common Stock and
$2.16 Preferred Stock closed at $9.50 and $45.00,
respectively.
3. The Board of Directors has unanimously approved the
Recapitalization. The Company has obtained an opinion
from a nationally-recognized investment bank that as of
December 30, 1993, the terms of the Recapitalization
are fair from a financial point of view to the holders
of the $2.16 Preferred Stock and the Common Stock. The
Company also has entered into an agreement in principle
with Croyden Associates to settle a class action
lawsuit challenging the Recapitalization.
4. A wholly-owned subsidiary of Metropolitan Life
Insurance Company that holds shares of the $2.20
Preferred Stock and Common Stock constituting
approximately 28% of the outstanding shares of capital
stock entitled to vote at the Annual Meeting has
indicated to the Company that it intends to vote all of
its shares in favor of the Recapitalization, subject to
certain conditions.
5. Assuming the maximum acceptance of the Exchange Offer
and consummation of the Reclassification, on a pro
forma basis at September 30, 1993:
* the 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; and
* Common Stock and other stockholders' equity would
increase from $44 million to $120 million.
6. The Recapitalization will increase the Company's
financial flexibility by extending its debt
amortization schedule, eliminating dividend arrearages
and enhancing the Company's ability to undertake its
investment program and obtain long-term financing.
FOR ADDITIONAL INFORMATION
INFORMATION AGENT FINANCIAL ADVISOR
GEORGESON SMITH BARNEY SHEARSON INC.
& COMPANY INC. (415) 955-1593 (Call Collect)
(800) 223-2064
(212) 440-9800 (Banks and Brokers)
(212) 509-6240 (Call Collect)
