Posted on 06/10/2003 8:55:17 AM PDT by Ernest_at_the_Beach
HOUSTON (AP)--El Paso Corp. and the leader of a dissident effort to urge shareholders to oust its board traded more barbs Monday, trying to shore up support with just a week to go before the company's annual meeting.
El Paso said the dissidents may derail the company's agreement to pay $1.7 billion to settle all litigation related to California's energy crisis of 2000 and 2001. Selim K. Zilkha, who launched the effort to replace the board, called that a ``lie'' amid the current leadership's ``increasingly desperate attempts to stay in power.''
The agreement, reached in March and awaiting approval from courts and regulators, would settle civil lawsuits as well as state and federal investigations and administrative proceedings into claims that the company withheld supplies from California and drove up prices in 2000. Analysts largely praised the move as a way to erase a drag on company stock and reduce exposure to court-imposed punitive fines.
Stephen Chesebro, the former chief executive of Tenneco Inc. and the dissidents' choice as El Paso's CEO if they are successful, has called the settlement ``unfathomable.'' Chesebro said the new leaders would review it, and ``it is hard for me to understand what you could do so wrong that would cause a $1.7 billion penalty.''
Houston-based El Paso expressed ``heightened concern'' Monday about what the natural gas company called Chesebro's ``implicit threat'' to derail the settlement.
Zilkha said any new directors would be remiss in their duties if they didn't review the settlement along with all other facets of the company.
Zilkha, who owns 1.5 percent of El Paso's stock, launched the effort to replace El Paso's 12-member board with nine new directors after the current board voiced support for then-chief executive William Wise despite the depressed stock price and junk credit ratings.
El Paso fired Wise two days later. Since January, the company also appointed new directors with oil and gas industry experience after Zilkha complained of the lack of such experience on the board. But Zilkha plowed ahead, saying El Paso needs an entirely new board and culture to attain real improvement.
A shareholder vote is scheduled for El Paso's June 17 annual meeting.
The company told shareholders in a letter mailed Monday that it ``has learned from past mistakes.''
``In our view, El Paso's share price, which has almost tripled since February, reflects investors' recognition of the company's progress,'' the company said.
El Paso shares dropped as low as $3.33 in February after trading higher than $70 in early 2001. Shares closed down 23 cents at $9.10 Monday on the New York Stock Exchange.
``A far scarier prospect is to leave the incumbent management and board in place and to let them continue to run the company into the ground,'' Zilkha said.
AP-NY-06-09-03 1849EDT
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I'm glad I don't work for El Paso. If I were an employee, I'd want a change, but I'd be afraid that the vote might be unsuccessful, and management would retaliate against employees who voted their shares against them.
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