Don't cry for me, Amarillo

How once-fearsome corporate raider T. Boone Pickens was beaten at his own game -- by a one-time protege

"The Texas oilman is obsessed with enemies. He is as thin-skinned as the chief executives he is always attacking," the Journal writers asserted in the second paragraph.

During the next few years, matters would go from bad to worse for Pickens and Mesa. The company's earnings and stock price tumbled from a high of $65 in 1988 to a low last year of $5. The company's losses from 1989 to 1994 ranged from $60 million to $200 million a year.

In 1986, Mesa had borrowed $715 million to buy Tenneco reserves. Pickens, who bragged in his autobiography that he had never been scared of debt, opted to wait on paying off the banks and instead to distribute shareholder dividends even though gas prices were dropping.

Warm winters and low gas prices translated into losses. Pickens borrowed money in the late '80s and early '90s to pay out more than $1 billion in shareholder dividends, a decision that appears disastrous in hindsight. Meanwhile he sank all of Mesa's assets into natural gas only to have the commodity's price plummet.

By 1991, Pickens moved Mesa's corporate headquarters away from the maelstrom of Amarillo to Dallas. He described the year to shareholders in his annual report as "another year of new lows for Mesa."

By 1992, with debt payments strangling the company, Pickens finally bought some time from the banks. He delayed interest payments on the debt until 1996 and agreed to meet a balloon payment of $620 million in 1998.

That gave him an opportunity to go back to the equity markets, which he did in 1994. But Pickens had trouble raising capital, and ultimately had to turn to his friends for money and buy more Mesa stock himself, raising his stake in the company to about 7 percent.

Pickens had to go through the dog-and-pony-show routine, pitching Mesa stock to potential investors in meetings. One professional involved in the stock offering recalls that it became apparent Pickens had lost some of his appeal with the young people who typically manage institutional investments.

"It was kind of sad," the professional says. "It was the old Boone against a new audience, a bunch of 33-year-olds. They didn't know what he had done."

While Pickens was trolling for cash, though, the West Coast was proving more hospitable for his former protege.

At his new investment banking firm in La Jolla, David Batchelder was faring quite well. Two billionaires -- the flamboyant Marvin Davis in Los Angeles and the dissimilarly reclusive Dennis Washington in Missoula, Montana -- had hired him to give investment advice. Batchelder made them big money -- $150 million for Davis -- going after the parent company of Northwest and United Airlines. Washington, working with Batchelder, bought shares and ousted the management of the off-price retailer Pic N'Save.

As a freelance investment and takeover adviser, Batchelder wasn't getting any assistance from Pickens. The two rarely talked, Batchelder says. And if investors called Pickens for a reference on the former star of Boone's Boys, Pickens would "damn him with faint praise," says another former Mesa employee.

"At the end of the conversation, just in case they didn't get it, Pickens would say, 'Go ahead, ask me if I'd hire him again.' "

Asked, Pickens would respond, "No," says the former Mesa employee, who overheard Pickens reiterate the conversations.

Batchelder, in fact, had encountered something that others who left Mesa had seen: After departing Pickens' employ, they became the target of his bitterness. "It is very tragic. There is a part of Boone that won't allow someone to leave," says the same former employee. "There is something about him that wants to take it back."

Pickens has never been timid when it comes to criticizing or chastising. Verbal attacks on other businessmen, in fact, are part and parcel of the Pickens' method for taking a run at somebody else's company.

For the better part of the past decade he has roundly and regularly criticized other corporate chieftains at Cities Services, UNOCAL, Gulf Oil and Phillips Petroleum while making plays to seize control of their companies. He once told reporters, "Tom Thumb, Pluto and Mickey could have done a better job of running Texaco Inc. than its board has." Nothing personal, Pickens always asserted after lambasting a CEO, it's just business.

But when Pickens found himself in a battle to retain control of his own company, he seemed to forget much of what he once preached. The fight for Mesa Inc. was nothing if not personal -- a battle between Pickens and his onetime protege.

In 1994, Pickens' prospects weren't bright by any measure. He had bet heavily on natural gas and bet wrong. He had some $1.2 billion in loans about to come due at the banks. Gas prices were still in the basement. He became -- the irony starts here -- a takeover target himself.

And the man orchestrating the hostile takeover threats was Batchelder.
When Pickens had increased his personal stake in Mesa to 7 percent in 1994, Batchelder sniffed opportunity. Every year since he had left Mesa, Batchelder says, he systematically reviewed Mesa as a potential investment.

"Batchelder saw [Pickens buying more Mesa stock] and he thought, 'Either Boone is going to fix it or sell it. Boone must believe it's worth it, so I will follow right behind him,' " says an investment professional who has done business with Batchelder.

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