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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-1
(Amendment No. 6)
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
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Pennzoil Company
(Name of Subject Company)
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Union Pacific Resources Group Inc.
Resources Newco, Inc.
(Bidders)
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Common Stock, par value $0.83 1/3 per Share
(Including the Associated Preferred Stock Purchase Rights)
(Title of Class of Securities)
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709903 10 8
(CUSIP Number of Class of Securities)
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Joseph A. LaSala, Jr., Esq.
Vice President, General Counsel and Secretary
Union Pacific Resources Group Inc.
801 Cherry Street
Fort Worth, Texas 76102
Telephone: (817) 877-6000
(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications on Behalf of Bidders)
Copies To:
Howard L. Shecter, Esq. Paul T. Schnell, Esq.
Morgan, Lewis & Bockius LLP Skadden, Arps, Slate, Meagher & Flom LLP
101 Park Avenue 919 Third Avenue
New York, NY 10178-0060 New York, NY 10022-3897
Telephone: (212) 309-6384 Telephone: (212) 735-3000
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<PAGE>
This Amendment No. 6 amends the Tender Offer Statement on Schedule
14D-1 filed on June 23, 1997 (the 'Schedule 14D-1') by Union Pacific Resources
Group Inc., a Utah corporation ('UPR'), and Resources Newco, Inc., a Delaware
corporation and a wholly owned subsidiary of UPR (the 'Purchaser', and together
with UPR, the 'Bidders'), with respect to Purchaser's offer to purchase up to
25,094,200 shares of Common Stock, par value $0.83 1/3 per share (the 'Shares'),
of Pennzoil Company, a Delaware corporation ('Pennzoil'), or such greater number
of Shares as equals 50.1% of the Shares outstanding on a fully-diluted basis, in
each case together with the associated Preferred Stock Purchase Rights, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
June 23, 1997 (the 'Offer to Purchase'), and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the 'Offer'), which were filed as Exhibits (a)(1) and (a)(2) to the
Schedule 14D-1, respectively. Unless otherwise defined herein, all capitalized
terms used herein shall have the respective meanings given such terms in the
Offer to Purchase.
Item 11. Material to be Filed as Exhibits.
Item 11 is hereby amended to add the following:
(a) (12) Form of letter to certain Pennzoil stockholders.
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SIGNATURES
After due inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
UNION PACIFIC RESOURCES GROUP INC.
By: /s/ JOSEPH A. LASALA, JR.
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Name: Joseph A. LaSala, Jr.
Title: Vice President, General Counsel
and Secretary
RESOURCES NEWCO, INC.
By: /s/ JOSEPH A. LASALA, JR.
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Name: Joseph A. LaSala, Jr.
Title: Vice President, General Counsel
and Secretary
Dated: July 9, 1997
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EXHIBIT INDEX
Exhibit No. Description Page No.
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(a) (12) Form of letter to certain Pennzoil stockholders.
<PAGE>
Union Pacific
Resources
Jack L. Messman
Chairman & CEO
[Date]
[Shareholder name
and address]
Dear [ ]:
Union Pacific Resources' offer to acquire Pennzoil is receiving
enthusiastic support from Pennzoil shareholders. However, this endorsement needs
more: Pennzoil shareholders must clearly demonstrate their support for a
negotiated transaction by tendering their shares to UPR on or prior to July 21,
1997.
We firmly believe that Pennzoil cannot, on its own, provide shareholders
present value equal to UPR's offer. Yet, Pennzoil has repeatedly refused even to
discuss our offer and is attempting to "just say no" to our proposal by relying
on its numerous anti-takeover defenses.
The most important message you can send to Pennzoil's management and Board
of Directors is that you want them to negotiate a transaction with UPR. The most
effective way to convey that message is to tender your Pennzoil shares to UPR on
or prior to July 21, 1997.
We encourage you to contact Pennzoil's Board of Directors and management
directly to communicate your views on the proposed transaction. Enclosed please
find a list of suggested questions that may be useful in your discussions with
Pennzoil's Board and management. You also will find enclosed with this letter
"An Important Message to Pennzoil Shareholders."
If you have any questions about our proposal, please contact me or Mike
Liebschwager, UPR's Manager of Investor Relations, at 817-877-6531. If you have
any questions about the tender offer process, please call Morrow & Co. at
1-800-662-5200.
We are determined to pursue our offer. Your support can make the difference
in persuading Pennzoil to negotiate with UPR.
Sincerely,
Jack L. Messman
<PAGE>
AN IMPORTANT MESSAGE TO PENNZOIL SHAREHOLDERS
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[Date]
As you know, Union Pacific Resources has offered to acquire the shares of
Pennzoil Company at a substantial premium to both the recent and historical
trading prices of Pennzoil's common stock. Our goal is to merge UPR and Pennzoil
and create the premier independent exploration and production company in the
nation.
In 1995, Pennzoil's CEO proposed just such a merger with UPR. Today, though, he
opposes the idea, despite the obvious and considerable value we are offering
Pennzoil shareholders -- and despite the repeated failure of Pennzoil to deliver
shareholder value throughout the 1990's. In fact, the equity value of Pennzoil
declined 27% from the time the present CEO took office in 1990 until we made our
offer. During that same period, the Dow Jones Industrial Average nearly tripled.
Since 1990, Pennzoil has announced a series of "strategic plans." Although these
plans have failed to produce any value for shareholders, Pennzoil's CEO
continues to hold out the hope of better days ahead. When he rejected UPR's
offer, he cited the "inherent value" of a vague, new "updated plan" to create
shareholder value. Pennzoil's announcements about its "updated plan" are hollow
and lack substance and specifics about how the company intends to achieve real
value. Pennzoil management's track record, established over many years, inspires
no confidence that they can successfully implement any new plan.
In contrast to Pennzoil's promises, UPR is offering Pennzoil shareholders real
value today -- in cash and the opportunity to hold a very attractive investment
in the combined UPR and Pennzoil. That combination, we are convinced, will
create growth and value far beyond what Pennzoil can generate on its own,
whatever the latest plans and promises of Pennzoil's management may be.
On June 20, 1997, in his letter to UPR rejecting our offer to discuss a
negotiated transaction, Pennzoil's CEO stated that, "We believe that the
marketplace, like our shareholders, does not fully appreciate the benefits
already achieved, and still to be achieved, under our plan." This statement
shows a disappointing lack of appreciation for the difficult decade Pennzoil
shareholders have endured. We believe that Pennzoil shareholders fully
understand the company's record of unfulfilled promises and poor performances,
and that Pennzoil's stock price has accurately reflected this record.
We at UPR have heard from many Pennzoil shareholders who are enthusiastic about
the $84 price of the cash tender. And, as one analyst concluded, "If you put
Union Pacific Resources' drilling philosophy onto Pennzoil's properties, you'd
have a real powerhouse."
We urge you, the shareholders of Pennzoil, to:
o Reject a decade of broken promises and poor performance at Pennzoil.
o Remind your management and Board that shareholders are, after all, the real
owners of Pennzoil and their interests must come before those of executives
and directors.
o Demand that Pennzoil's management and Board negotiate with UPR.
o Send a loud and clear message to the Pennzoil Board by tendering your
shares to UPR no later than July 21, 1997. This is the most important
action that you as a shareholder can take at this time to demonstrate your
belief that Pennzoil should begin negotiations with UPR.
<PAGE>
Suggested Questions for Pennzoil Management and Board of Directors
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General
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1. Pennzoil thought that a combination with UPR was strategically compelling
in 1995. Why does Pennzoil think it is not worth discussing today?
2. What specifically does Pennzoil's newest strategic plan provide? How is it
different from previous plans? What value can it achieve and when? Why is
Pennzoil better able to implement this plan than its previous, unsuccesful
plans?
3. Why has Pennzoil adopted so many anti-takeover provisions which prevent
shareholders from having the right to consider offers to acquire the
Company?
4. Why does Pennzoil maintain that UPR's larger size is a reason not to
combine the two companies? Is management control of the combined company
the real issue for Pennzoil?
5. How will Pennzoil produce shareholder present value equal to or in excess
of the UPR offer? What is the value contribution from (1) domestic E&P, (2)
international E&P and (3) downstream operations (refined products, Jiffy
Lube)? What specific forecasts and investment programs support a value
in excess of UPR's offer?
6. In light of the fact that UPR's offer represents a substantial premium to
historical and recent trading prices, why isn't Pennzoil willing to meet
with UPR?
Financial Performance
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1. To what degree is Pennzoil's improved performance in 1996 and the first
quarter of 1997 the result of substantially higher oil and gas prices and
extraordinary items, such as gains on asset sales, rather than operational
improvements?
2. Pennzoil has stated in its Schedule 14d-9 that it has a reasonable
probability of at least doubling reserves within the next 3-5 years. How
can this be done? Don't annual reserve additions have to increase 3-4 times
over historical levels? If it is hoped that international reserves will
provide this increase, when will these anticipated reserves produce cash
flow?
3. If Pennzoil is to substantially improve its financial performance,
production will need to materially increase over historical levels. How
will increased production be achieved given years of declining volumes and
Pennzoil's relatively small drilling program?
4. Having been the beneficiary of the $3 billion Texaco settlement, what
effective rate of return has Pennzoil earned on these funds?
5. In 1995 when Pennzoil adopted the requirements of SFAS 121 to account for
impairment of long-lived assets, a $379 million pre-tax write-down to oil
and gas properties was incurred. This write-down represented approximately
18% of the net book value of Pennzoil's oil and gas property, plant and
equipment at the beginning of the year. Most other oil and gas companies
recognized SFAS 121 write-downs of approximately 1% of net property, plant
and equipment. Why were Pennzoil's oil and gas properties so
disproportionately impaired? Doesn't this suggest that its investment
program has not been successful? How much of Pennzoil's earnings
improvement in 1996 is attributable to this write-down?
<PAGE>
Capital
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1. Given Pennzoil's substantial financial leverage, how does management plan
to fund development of both its domestic and international properties? Will
management sacrifice one for the other once again?
2. Why has Pennzoil traded away the future upside of some of its most highly
touted projects (e.g., the farmout with Enterprise in the Gulf of Mexico
and the sale of half of Pennzoil's interest in the ACG unit in Azerbaijan)?
3. What future divestitures, joint development arrangements or financings are
planned to obtain the necessary capital to fund existing projects?
4. Isn't it true that asset sales have been the primary source of cash used
to reduce debt since year end 1995 ($480 million of asset sales in 1996)?
How is the sale of assets to retire excessive indebtedness going to
maximize value to shareholders?
International
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1. How much production, reserves and value will Pennzoil actually receive from
its international prospects after deducting the government participation
(which ranges from 30% to 80% of Pennzoil's working interest share)?
2. Isn't it true that Pennzoil will not receive any production (as one analyst
mentioned, until 2003) when the ACG unit starts up, because it has
relinquished its production for a "carry" on future capital expenditures
until project payout? When will Pennzoil start receiving production from
this project?
3. Pennzoil sold a 5% interest in the ACG unit in 1996 for an amount equal to
$130 million less certain payments due Pennzoil from the Azerbaijan
government, plus a carry on future capital. Isn't that transaction a good
proxy for the value of its remaining 4.82% interest?
4. Assuming Karabakh (30% Pennzoil interest before production sharing) is an
oil discovery, and not gas or dry, how will Pennzoil fund the capital
required to develop the field? Will it be forced to sell off a substantial
piece, as it did at ACG? When is the earliest that Pennzoil might see
production, given the long lead times and lack of pipeline export capacity?
Executive Compensation
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1. Why did Pennzoil's Board recently adopt significant benefits enhancements
for their senior management? Was their motive to enhance shareholder value
or was it management entrenchment? Why have they not disclosed the costs of
these new benefits?
