SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
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[x] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
MESA INC.
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(Name of Registrant as Specified In Its Charter)
SAME
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notes:
Boone Pickens
chairman of the board and chief
executive officer
[LOGO OF MESA APPEARS HERE]
August 19, 1995
Dear Fellow Shareholder:
Not long ago I wrote you to outline in detail an ambitious program initiated
by MESA's board of directors in an effort to maximize shareholder value. This
program began with a comprehensive review of available strategic alternatives,
and I think it is important to update you on this effort. I also want to focus
your attention on some recent developments that threaten to disrupt this
process and impair the value of your MESA holdings.
SEEKING TO MAXIMIZE SHAREHOLDER VALUE
As I indicated last month, we are focusing our energies on pursuing all
available strategic alternatives to maximize value for our shareholders. To
facilitate this process, we have retained an independent financial adviser,
Lehman Brothers Inc., and we are now in the process of pursuing a wide range of
options, including:
. The sale or merger of MESA with another company
. The sale of major pieces or all of our Hugoton field properties in southwest
Kansas
. A large equity infusion.
This program is MESA's number one priority, and, accordingly, we have put
this program on the fast-track and imposed an aggressive timetable to achieve
our objectives. Already, Lehman Brothers has contacted more than 100 domestic
and foreign companies that are candidates for any of the above. Data rooms will
be open shortly enabling these companies to review the information necessary to
formulate proposals. We are asking the bidders to submit definitive proposals
by late November.
OUR OBJECTIVE HAS ALWAYS BEEN TO MAXIMIZE SHAREHOLDER VALUE. It's the same
goal that led us to create a master limited partnership in 1985, a structure
through which we distributed more than $1.1 billion to our shareholders over a
four-year period.
MESA's personnel are the most qualified to move this process forward. Members
of MESA's board and management have first-hand knowledge of MESA's assets and
operations and also own substantial stakes in the company.
1400 WILLIAMS SQUARE WEST / 5205 NORTH O'CONNOR BLVD. / IRVING, TEXAS 75039-3746
PHONE 214 402-7001 / FAX 214 402-7023
A COORDINATED SCHEME TO ACCUMULATE SHARES AND ACQUIRE CONTROL
In sharp contrast to the efforts of the majority of MESA's board and
management to maximize value for all shareholders are the secretive, self-
serving and highly disruptive activities of a dissident shareholder group.
This group is being advised by David Batchelder, a former MESA employee (who
owns no MESA stock for his own account), and includes investors Marvin Davis
and Dennis Washington, who purchased the bulk of their holdings in 1994 but
did not publicly reveal their group's existence until June 1995. This
dissident group is threatening to call a special shareholders' meeting to
replace your entire board (but has said they may or may not actually do so),
and has filed preliminary proxy material to do so. They have also filed a
lawsuit against MESA and some of your directors.
MESA has filed a lawsuit alleging that Batchelder secretly formed a "hub-
and-spoke" group to acquire MESA stock and served as the group's "hub." The
suit alleges that the defendants violated Section 13(d) of the Securities
Exchange Act of 1934 because they had constituted a group owning more than 5
percent of the company's stock since late 1994, but withheld that information
from our shareholders until June 29, 1995.
On several occasions from and after December 5, 1994, in discussions
regarding Mr. Washington's investment in MESA, David Batchelder has stated to
MESA representatives that he had "no hidden agenda" with respect to MESA. New
information has come to light during the discovery stages of MESA's lawsuit
against the group that casts considerable doubt on the credibility of this
statement and raises serious questions about the group's motivations going
forward. For example:
. David Batchelder recruited at least four persons in addition to Mr. Davis
and Mr. Washington to acquire MESA stock during the late summer and early
fall of 1994, and we believe these people are part of his "hub-and-spoke"
scheme. In fact, these four persons acquired an aggregate of 5.58 million
shares, or 8.7 percent, prior to December 1994.
. Most of David Batchelder's "spokes" agreed to pay his company, Batchelder
and Partners, Inc. (BPI), 15 percent of any profits they made on their
MESA stock holdings, although Mr. Davis negotiated a special 5 percent fee
arrangement.
. Sequential purchasing of shares at separate intervals and other actions
appear to show a pattern of coordination in the purchasing of MESA shares
by Mr. Davis, Mr. Washington and these other investors.
. David Batchelder and BPI developed plans for acquiring control of MESA.
These plans were presented to certain "spokes" during the late summer and
early fall of 1994 in books entitled "Project Boot," which outlined plans
for acquisitions of shares, business combinations or other transactions as
well as a proxy contest.
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. In mid-1994, David Batchelder and BPI made presentations to certain other
oil and gas companies recommending that they retain BPI as a merger and
acquisition adviser for the purpose of initiating attempts to acquire MESA.
MESA believes that the Batchelder "hub-and-spoke" group's secretive and self-
serving activities and continued, highly public attacks on management and the
majority of the board are disrupting our program to enhance shareholder value.
These activities and attacks are creating uncertainty about MESA's future,
casting doubt on the credibility of the program and distracting MESA resources
from the pursuit of the objectives outlined above.
If, in fact, David Batchelder and his group have "no hidden agenda" with
regard to MESA, why is the "hub-and-spoke" group continuing to criticize MESA's
efforts to maximize shareholder value, a process they claim to support? Is the
"hub-and-spoke" group trying to take control of MESA for their own benefit
without paying you any control premium for your shares?
MY PROMISE TO YOU
There is no greater believer in MESA--or in our ability to enhance
shareholder value to the maximum extent possible--than me. I remain the
company's largest individual shareholder and, in the past year-and-a-half, have
purchased an additional 2.2 million shares of the company. I am as motivated as
anyone to achieve full value for all MESA shareholders. I believe the best way
to achieve this objective is through the program I have outlined for you.
I appreciate your ongoing support for MESA's board and management, and I
promise to do everything possible to see you receive the maximum value for your
MESA holdings.
Sincerely,
[SIGNATURE OF BOONE PICKENS APPEARS HERE]
Boone Pickens
Chairman and CEO
On Behalf of the Majority of MESA's
Board of Directors
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REQUIRED DISCLOSURE: INFORMATION REGARDING PARTICIPANTS
The Company, each of its directors (other than David H. Batchelder and Dorn
Parkinson) and each of its executive officers could be deemed to be
participants (within the meaning of Rule 14a-11(b) under the Securities
Exchange Act of 1934, as amended) in any solicitation in opposition to the
solicitation for requests to hold a special meeting of the shareholders of the
Company by Dennis R. Washington, Marvin Davis and certain of his affiliates,
Mr. Batchelder and Mr. Parkinson (the "13D Group"). The identities of the
executive officer participants and a description of their interests in the
solicitation are as follows: T. Boone Pickens, Chairman and Chief Executive
Officer (owns beneficially 4,945,376 shares of Common Stock and, in 1994, was
awarded total compensation of $1,944,500 and 200,000 options; Paul W. Cain,
Director, President and Chief Operating Officer (owns beneficially 260,139
shares of Common Stock and, in 1994, was awarded total compensation of $643,523
and 150,000 options); Stephen K. Gardner, Vice President and Chief Financial
Officer (owns beneficially 69,229 shares of Common Stock and, in 1994, was
awarded total compensation of $177,951 and 85,000 options); Dennis E.
Fagerstone, Vice President-Exploration and Production (owns beneficially 81,000
shares of Common Stock and, in 1994, was awarded total compensation of $350,977
and 85,000 options); Andrew J. Littlefair, Vice President-Public Affairs (owns
beneficially 85,938 shares of Common Stock and, in 1994, was awarded total
compensation of $252,697 and 85,000 options); and William D. Ballew, Controller
(owns beneficially 51,103 shares of Common Stock and, in 1994, was awarded
total compensation of $188,639 and 45,000 options). The options awarded in 1994
have an exercise price of $4.25 per share and vest as follows: 30% on June 1,
1995, 55% on December 1, 1995, 80% on December 1, 1996 and 100% on December 1,
1997. Each of the executive officers participates in the Company's Employees
Premium Plan, Profit Sharing Plan and 1991 Stock Option Plan and is covered by
customary liability insurance purchased by the Company. In addition, the
Company permits Mr. Pickens and his affiliates to use certain of the Company's
properties and assets for noncompany purposes on terms that, while not
disadvantageous to the Company, may be more favorable to Mr. Pickens than those
otherwise available to him. Mr. Pickens and affiliates reimbursed the Company a
total of $113,894 in 1994 for the use of these assets. The Company periodically
makes use of certain facilities owned by Mr. Pickens, paying for the use of
these facilities at rates comparable to those charged for similar facilities
owned by third parties. The Company paid Mr. Pickens $127,500 in 1994 for the
use of such facilities. The identities of the non-employee director
participants and a description of their interests in the solicitation are as
follows: John S. Herrington (owns beneficially 10,000 shares of Common Stock);
Wales H. Madden, Jr. (owns beneficially 22,000 shares of Common Stock); Fayez
S. Sarofim (owns beneficially 1,400,000 shares of Common Stock); Robert L.
Stillwell (owns beneficially 26,500 shares of Common Stock); and J. R. Walsh,
Jr. (owns beneficially 75,620 shares of Common Stock). Each of such non-
employee directors received $20,000 cash compensation for services as a
director in 1994 and is covered by customary liability insurance purchased by
the Company. In addition, Mr. Sarofim is Chairman of the Board, President, and
owner of a majority of the outstanding capital stock of Fayez Sarofim & Co.,
which acts as an investment adviser to certain employee benefit plans of the
Company. During the year ended December 31, 1994, Fayez Sarofim & Co. received
fees, paid by the employee benefit plans, of $135,442 for such services and has
been retained to provide such services in 1995. Mr. Stillwell is a partner in
the law firm of Baker & Botts, L.L.P. The Company retained Baker & Botts,
L.L.P. and incurred legal fees for such services in 1994. Baker & Botts, L.L.P.
has been retained to provide legal services in 1995. Mr. Walsh is President and
Chairman of the Board of United Mud Service Company. The Company paid United
Mud Service Company $82,428 for drilling mud and services during the year ended
December 31, 1994, and expects to use United Mud Service Company for such
products and services in 1995. The beneficial ownership information set forth
above is as of July 31, 1995 and includes with respect to the executive officer
participants an aggregate of 1,513,500 shares of Common Stock issuable upon
exercise of options that are exercisable within 60 days of such date. For more
detailed information regarding executive compensation and other matters
described above, see the Company's Proxy Statement for its 1995 annual meeting
and the Company's Proxy Statement in response to the 13D Group's solicitation
for written requests to hold a special meeting, a copy of which will be mailed
to shareholders.
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