LOS ANGELES -- In the first major sale of assets since patriarch Armand Hammer's death last year, Occidental Petroleum Corp. said yesterday that it has agreed to sell most of its natural gas liquids business into a joint venture with Dallas-based Hicks, Muse & Co. in a deal that will net it about $432 million.
Occidental would retain half-ownership of the resulting joint venture, Trident Energy Inc., and would continue to operate the business that produces propane, ethane, natural gasoline, butane and other liquids, a spokesman said.
Proceeds of the proposed sale, part of an ambitious restructuring program undertaken after Mr. Hammer's death last December, will help meet the company's goal of eliminating $3 billion of its more than $8 billion of long-term debt.
"This transaction allows us to take a significant amount of cash outof the natural gas liquids business while retaining a 50 percent ownership position," Occidental Chairman Ray R. Irani said in a statement.
Under terms of the proposed deal, Occidental's Oxy USA Inc. unit will sell assets in Kansas, Oklahoma, Texas and Louisiana -- including 40 gas processing plants, four pipelines, more than 20 million barrels of storage capacity and a marine terminal -- for $691 million, with Hicks Muse assuming $9 million of debt.
The assets will be placed into a joint venture. Occidental and Hicks Muse, which specializes in leveraged buyouts, will each pay $100 million into the venture for a half share.
The rest of the transaction is to be financed with debt that won't be reflected on Hicks' or Occidental's balance sheets, company officials said. The deal is subject to finding financing.
Thomas O. Hicks, chairman of Hicks Muse, said the deal fit in with the company's long-term strategy.
"We identified gas liquids as an attractive niche business a year ago," he said in a statement.
Trident Energy will agree to supply 30 percent of the venture's annual production to provide feedstocks for Occidental's chemical plant at Lake Charles, La.
In addition, Occidental will retain other natural gas assets that are critical to its ongoing exploration and production operations, Occidental said.
The sale is the latest and largest of a series of deals that Occidental, under Mr. Irani, has entered to pare debt and focus the company on its core oil, natural gas and chemicals operations.
The company has so far netted $68 million from sales of assets.
Those include sales of a 5.4 percent interest in Church & Dwight, manufacturers of Arm & Hammer baking soda; a 50 percent interest in a natural gas liquids terminal in Antwerp, Belgium; and the company's phosphate and phosphoric acid business.