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Gas industry

Mesa Inc's Chairman Faces Challenges Amid Debt and Securities Lawsuits

Strategic Insights

— 1 min read

Mesa Inc, a debt-ridden natural gas company, is expected to consider selling or merging itself following a request from Chairman T. Boone Pickens, Jr. However, analysts doubt the company will receive attractive offers due to its high debt and limited equity value. Meanwhile, Mesa has filed a lawsuit against investors Dennis Washington and Marvin Davis, alleging that they failed to disclose their joint 9.4% stake in the company earlier.

Key Takeaways:

  • Analysts expect Mesa to receive low offers due to its high debt and limited equity value, with one analyst estimating that the company won't get more than the current stock price.
  • The lawsuit against Dennis Washington and Marvin Davis alleges that they secretly recruited investors to acquire Mesa stock and manipulate the market price, violating federal securities laws.
  • The company's restructuring program is being reviewed by the board, which will also discuss the status of its debt restructuring and potential sale or merger opportunities.
  • The lawsuit is Mesa's response to the SEC filing by Washington and Davis, which disclosed their joint 9.4% stake in the company, and their consideration of seeking control of the board.
  • Chairman Pickens has made enemies over the years, with some analysts citing frustration with Mesa's share price and others holding personal vendettas against him.
  • The company's debt is estimated to be $1.2 billion, and analysts have downgraded the ratings on its secured and unsecured discount notes due to its operating cash constraints and high leverage levels.

Statistics:

  • Mesa's debt is estimated to be $1.2 billion.
  • The company's equity value is limited, and analysts expect it to receive low offers if it decides to sell.
  • The lawsuit alleges that Dennis Washington and Marvin Davis held a 9.4% stake in Mesa, which they failed to disclose earlier.
  • Mesa's shares rose 0.25% to $4 7/8 in Wednesday trading.

Sources:

  • "Mesa Inc. chairman to seek board OK on sale or merger," Dallas Morning News, June 1995
  • "Mesa Inc. sues investors for violating securities laws," Dallas Morning News, June 1995
  • "Mesa Inc.'s Pickens facing challenges amid debt and securities lawsuits," Wall Street Journal, June 1995
  • G. Bryan Dutt, analyst at Howard, Weil, Labouisse and Friedrichs Inc.
  • Gregg Anderson, analyst at Duff & Phelps Credit Rating Co.

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