Unocal Begins Partial Redemption of Securities

Unocal Corporation (NYSE: UCL) said that Unocal Capital Trust has given notice to the Bank of New York (as trustee) to redeem one-half of Unocal's outstanding 6-1/4% Trust Convertible Preferred Securities.

The 5.2 million shares to be redeemed have an aggregate liquidation value of about $261 million. These securities will be redeemed on Sept. 20, 2004, with a redemption premium of 1.25 percent. Including the premium and accrued and unpaid distributions, the total cost of the redemption program is $265 million.

The partial redemption will eliminate the potential dilution of up to 6.1 million common shares (based on the conversion rate to common stock for the preferred securities). The redemption of the securities is expected to reduce Unocal's annual interest expense by more than $16 million. The redemption of the trust convertible preferred securities is one aspect of a three-part cash expenditure program of up to $511 million that Unocal announced late last month. The other aspects included a $100 million voluntary contribution to Unocal's U.S. pension plan, which has been completed, and the repurchase of up to $150 million of Unocal's common stock. On Aug. 4, Unocal announced that it had begun common stock repurchases under that program.

If completed as expected, the common stock and preferred repurchase programs would reduce Unocal's diluted share count by about 10 million shares, or nearly 4 percent of the diluted share balance as of Aug. 13, 2004.

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