Business: Richfield & Sinclair

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About this time Harry Sinclair borrowed a Fokker from his new Rio Grande company, flew to California for an oilmen's dinner in his honor. "Gentlemen," said he, looking brawny President Kenneth Raleigh Kingsbury of Standard Oil of California in the eye, "I am in California and I am in to stay." Richfield's next half-dozen abortive reorganization plans came alternately from Standard Oil's Kingsbury and Consolidated's Sinclair. As soon as the prospects seemed good for selling out to one company the other company would raise the bid. Sinclair's last offer was $17,600,000 in stock, $10,000,000 cash in 1933. This was $5,000,000 more cash than Standard offered, but Richfield's bondholder and creditor committees decided that Harry Sinclair's securities were of uncertain market value, turned down his bid. It looked as if President Kingsbury had won. At Consolidated's annual stockholders' meeting in 1934, however, Harry Sinclair showed his ace. He announced that a deal was on with Henry L. Doherty to buy Richfield jointly. Same day, in California, Cities Service as one of Richfield's principal bondholders started an appeal in U. S. Circuit Court against the Richfield-Standard deal on the ground that the amount offered was grossly inadequate under California law.

Standard Oil of California nevertheless remained in the running until May 1935. when Oilman Sinclair cagily deprived Standard of its big incentive for buying Richfield by buying out Richfield's Eastern subsidiary. Richfield Oil Co. of New York. There followed a period in which the Doherty-Sinclair understanding awaited better days in the oil business and Richfield's able Receiver William Chester McDuffie continued to cut down annual losses in the face of excessive depreciation and depletion charges. Last spring, when Richfield was coming back to black ink for the first time since 1930, Harry Sinclair and Harry Doherty finally got together. Cities Service Co., which owned 25% of Richfield bonds, 14% of the bonds of Richfield's California subsidiary, Pan American Petroleum, and a majority of the Richfield preferred and common stocks, sold them all to Sinclair's Rio Grande Oil for a half interest in that company. In an immensely better tactical position to make use of the Richfield holdings than Doherty had been in 1931, Harry Sinclair proceeded to sponsor through Kuhn, Loeb & Co. a merger between Richfield and now prosperous Rio Grande.

Approved last September by two-thirds of the bondholders and creditors and last week by long-suffering Federal Judge William Parry James in Los Angeles District Court, the reorganization provides for a new company, Richfield Oil Corp., to which Rio Grande will contribute assets of between $15,000,000 and $20,000,000. Underwritten by Rio Grande, by Consolidated Oil and by Cities Service will be an issue of $10,000,000 in debentures, available to Richfield and Pan American bondholders and creditors through subscription certificates given them along with shares of stock in the new company. Underwritten by Kuhn, Loeb, by Consolidated Oil, by Cities Service, by Petroleum Corp. of America, by Atlas Corp. and by Blyth & Co. will be 550,000 shares of new common stock at $10 a share. The remainder of the total 1,000,000 shares is allotted to bondholders and creditors.