Unocal Completes Partial Redemption of Securities

Unocal Corporation (NYSE: UCL) has completed its previously announced redemption of approximately one-half of Unocal's outstanding 6-1/4% Trust Convertible Preferred Securities.

Unocal redeemed 4.9 million shares of the preferred securities with an aggregate liquidation value of $246 million. Including the 1.25-percent redemption premium and unpaid distributions, the total cost of the redemption program was $250 million. An additional 304,150 preferred shares that were called for redemption were converted by the holders to Unocal common stock.

The partial redemption eliminated the potential dilution of 5.8 million common shares (based on the conversion rate to common stock for the preferred securities). The redemption program is expected to reduce Unocal's book debt by nearly $269 million and cut the company's annual interest expense by about $16 million.

The convertible preferred redemption was one aspect of a three-part, $500 million cash expenditure program that Unocal announced in July 2004. The other aspects, which have already been completed, included a $100 million voluntary contribution to Unocal's U.S. pension plan and the repurchase of $150 million of Unocal's common stock.

The common stock repurchase and preferred redemption programs reduced Unocal's diluted share count by about 10 million shares, or nearly 4 percent of the diluted share balance as of June 30, 2004.

The total cash outlay for the three programs represented approximately one-half of the cash balance that Unocal reported at the end of the second quarter 2004. Unocal has said that if commodity prices remain high and the company has additional excess cash on hand at year-end, it may consider expanding one or more of these cash expenditure programs.

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