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Thursday, Jul. 30, 1998
DuPont sells Conoco stock to public
Oil producer gives $7.5 billion promissory note for transaction
Associated Press
WASHINGTON -- DuPont Co. will receive $7.5 billion as part of its plan to sell to the public stock in its Conoco Inc. oil and gas subsidiary, a regulatory filing shows.
Houston-based Conoco, the ninth largest U.S-based oil producer, plans to raise at least $3.5 billion in the initial stock offering, the company said in a registration statement filed with the U.S. Securities and Exchange Commission.
The subsidiary will use the proceeds from the stock sale, along with cash on hand, to repay part of a $7.5 billion promissory note issued to DuPont on July 20, according to the SEC filing. A promissory note is equivalent to a corporate IOU.
Conoco agreed to repay the balance of the promissory note, some $4 billion, by January 2000. Under an agreement with DuPont, Conoco promised to use any proceeds from subsequent stock or bond sales to repay the note and other money owed to its parent.
DuPont, based in Wilmington, Del., and the largest U.S. chemical company, will use the money for general corporate purposes, said spokeswoman Susan Gaffney. Such purposes could include spending to bolster DuPont's agriculture and biotechnology businesses.
(DuPont has operated a plant at Ingleside since 1972. It manufactures fluorocarbons that are used extensively by industries in refrigerants, cleaning agents for electronic components, medical applications and as foaming agents.)
Analysts have estimated that the initial public offering could raise $3 billion to $5 billion through the sale of a 20 percent stake in Conoco. That would value the company at $15 billion to $25 billion.
While Conoco said in the filing that it will sell Class A common shares that receive one vote each, the document didn't disclose what percentage of the company will be held by the public after the offering. DuPont will continue to control Conoco through the ownership of Class B common shares that receive 5 votes each.
Conoco may be planning to actually raise more than $3.5 billion through the IPO. The oil company said it would use the IPO proceeds and cash on hand to make payments on both the $7.5 billion promissory note and an additional $1.26 billion in loans from DuPont.
DuPont eventually plans to divest its entire stake in Conoco, an energy company founded in 1875 that explores for, produces, and refines crude oil into petroleum products. ``The form of divestiture,'' according to Wednesday's filing, could include further stock sales to the public, a spin-off of Conoco shares to DuPont shareholders, or the sale of the stake to one or more third parties.
Separating Conoco from DuPont will provide the oil company with better access to capital markets and permit it to adopt a more aggressive investment program in new and capital-intensive energy projects, the filing said. Conoco expects to make capital investments of $2.5 billion this year, up about 14 percent from 1997 spending (excluding an acquisition).
Net income at Conoco totaled $316 million for the first quarter of this year, down from $341 million during the same period in 1997. Revenue for the first quarter slipped to $5.83 billion in 1998 from $6.62 billion in 1997.
Edgar S. Woolard Jr., the former chairman and chief executive of DuPont, will serve as chairman at Conoco, according to a company news release. Archie W. Dunham will serve as Conoco's president and chief executive.
Underwriters for the stock sale will include Morgan Stanley Dean Witter; Credit Suisse First Boston; Goldman, Sachs & Co.; and Merrill Lynch & Co. Conoco shares will trade on the New York Stock Exchange under the symbol CLL.
Caller-Times staff contributed to this report.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web