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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 18, 1997
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-9210 95-4035997
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
10889 Wilshire Boulevard, Los Angeles, California 90024
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code:
(310) 208-8800
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Item 5. Other Events
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Recent Developments
Pursuant to the terms and conditions of the Stock
Purchase Agreement (the "SPA"), dated December 18, 1997, by
and between Occidental Petroleum Corporation, a Delaware
corporation ("Occidental"), as seller, and KN Energy, Inc.,
a Kansas corporation ("KN"), as buyer, Occidental will sell
to KN (the "Sale") all of the issued and outstanding shares
of common stock, $.01 par value per share (the "Shares"), of
MidCon Corp., a Delaware corporation ("MidCon"), a wholly-
owned subsidiary of Occidental. MidCon engages in interstate
and intrastate natural gas transmission, gas marketing and
electric power marketing through subsidiaries which
transport, store and purchase natural gas and sell gas to
utilities, municipalities and industrial and commercial
users.
Pursuant to the SPA, Occidental will sell the
Shares to KN in return for a cash payment of $2,103,974,390.
In addition, following the closing of the Sale certain
intercompany obligations will be settled. In connection
with the Sale, and on the terms and conditions specified in
the SPA, Occidental will also exchange a note issued by the
MidCon Corp. ESOP Trust (the "Trust") and guaranteed by
MidCon in the principal amount of approximately
$1,386,025,609 (the "Note"), for a note to be issued by KN
and secured by treasury securities or a letter of credit,
which note will be payable to Occidental in the principal
amount of approximately $1,386,025,609 plus an amount equal
to the accrued interest on the Note from December 31, 1997,
to the closing of the Sale. In connection with the Sale, KN
will guarantee the obligations of a MidCon subsidiary,
MidCon Texas Pipeline Operator, Inc. ("MTP"), as lessee
under that certain Intrastate Pipeline System Lease (the
"Lease"), dated as of December 31, 1996, by and between MTP
and an Occidental subsidiary, as lessor. The Lease provides
for the lease of the intrastate pipeline assets in Texas for
a 30 year term at average lease rentals of approximately $30
million per year. The Lease is presently guaranteed by
MidCon. The assumption of the Lease and other obligations
by KN in connection with the Sale is presently valued by
Occidental at approximately $500 million.
KN has informed Occidental that it expects to
initially finance the acquisition of MidCon through a bank
facility, which it expects to refinance through the issuance
of debt and equity securities in the capital markets.
It is currently anticipated that the sale of the
Shares will occur on or about February 27, 1998, subject to
the satisfaction of ordinary and customary conditions
precedent and the receipt of government approvals, including
the expiration or early termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
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As a result of the transaction, in the fourth
quarter Occidental will classify MidCon as a discontinued
operation and take a charge against earnings of
approximately $750,000,000. The charge reflects, among
other things, the difference between the book value of
MidCon and the anticipated proceeds from the Sale, net of
expenses of the Sale.
Concurrently with the closing of the Sale,
Occidental shall effect the redemption of all 1,400,000
issued and outstanding shares of Occidental's Cumulative
MidCon-Indexed Convertible Preferred Stock, par value $1.00
per share (the "CMIC Preferred Stock"), which were issued by
and are currently held by the Trust. Assuming gross
proceeds to Occidental from the Sale and the exchange of
the Note in the amount of approximately $3.49 billion,
Occidental expects to receive net proceeds, after payment of
the redemption price for the redemption of the CMIC
Preferred Stock, taxes and certain other expenses of the
Sale, of approximately $3.1 billion.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
OCCIDENTAL PETROLEUM CORPORATION
(Registrant)
DATE: December 31, 1997 DONALD P. DE BRIER
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Donald P. de Brier, Executive
Vice President, Secretary and
General Counsel
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