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PENNZOIL OFFERS DEBENTURES EXCHANGEABLE INTO CHEVRON SHARES

 HOUSTON, Jan. 7 /PRNewswire/ -- Pennzoil Co. (NYSE: PZL) announced the commencement of an underwritten public offering of $350 million principal amount of a new series of debentures exchangeable at the option of the holders into an aggregate of approximately 4.16 million shares of Chevron common stock owned by Pennzoil. In addition, the U.S. underwriters and international managers will be granted over-allotment options to purchase an additional $52.5 million of the new debentures.
 The proceeds of the offering will be used to replace higher-cost, refundable debt and other obligations of the company.
 James L. Pate, president and chief executive officer, said that the transaction effectively "monetizes" a portion of Pennzoil's investment in Chevron Corp. common stock (NYSE: CHV). Pennzoil currently owns 17,194,100 shares of Chevron Corp. common stock.
 "Our outlook for Pennzoil's investment in Chevron common stock is very positive," Pate said. "This offering allows Pennzoil to both participate in Chevron stock price appreciation and benefit from a very attractive interest rate. It is also an additional step in Pennzoil's debt restructuring begun in 1992," he said. On Dec. 31, 1992, Pennzoil called approximately $273 million of high-cost debt utilizing funds from the initial public offering of Purolator Products Co., funds from the operating cash flow included in the recently acquired Chevron oil and gas properties, and funds from the sale of certain oil and gas assets.
 Pate said that Pennzoil will retain voting rights and continue to receive dividends, representing $13.7 million annually, on the unexchanged shares of Chevron stock until the individual holders choose to exercise the exchange feature. The debentures are exchangeable into Chevron shares at $84.125 per share, representing an exchange premium of 20.4 percent over the NYSE closing price of $69.875. "Pennzoil has no plans to dispose of additional Chevron shares at this time," he added.
 The exchangeable debentures will have an issue price of 100 percent and a coupon of 6.5 percent. The bonds mature on Jan. 15, 2003 and will be callable beginning Jan. 15, 1998. Of the total issue, approximately 65 percent will be offered in the United States and approximately 35 percent will be offered in Europe.
 The use of the offering proceeds to replace Pennzoil's higher-cost debt and other obligations should result in an estimated increase in net income of approximately $5 million in 1993 and approximately $10 million in 1994 and subsequent years.
 The underwriting is being managed in the U.S. by Lehman Brothers and Lazard Freres & Co. and outside the U.S. by Lehman Brothers International and Lazard Brothers & Co., Limited.
 This shall not constitute an offer to sell or the solicitation of an offer to buy. An offering of these securities will only be made by means of a prospectus. A prospectus may be obtained by contacting the U.S. underwriters or international managers.
 -0- 1/7/93
 /CONTACT: Robert Harper of Pennzoil Co., 713-546-8536/
 (PZL)


CO: Pennzoil Co. ST: Texas IN: OIL SU:

SH -- NY014 -- 2492 01/07/93 08:45 EST
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Publication:PR Newswire
Date:Jan 7, 1993
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