DIAMOND <DIA> SPINOFF TO HAVE 60/40 DEBT/EQUITY
Roger Hemminghaus, chairman of the
refining and marketing company that is to spin off from Diamond
Shamrock Corp told Reuters that the new company will have a
debt to equity ratio of 60/40.
    Hemminghaus said cash flow between 80 and 120 mln dlrs per
year will reverse the ratio to 40/60 within two years.
    He said the spinoff, to be called Diamond Shamrock R and M
Inc, will probably occur just before the annual meeting of 
Diamond Shamrock Corp. The annual meeting is scheduled for
April 30 in Dallas, he said. Hemminghaus was in San Antonio for
the National Petroleum Refiners Association meeting.
    An effort by Texas oilman T. Boone Pickens to take over
Diamond Shamrock was a reason behind the company's decision to
spinoff, although a spinoff may have occurred anyway,
Hemminghaus said.
    He said that investment advisors told the company Pickens'
offer was inadequate and suggested the company split up into a
pure exploration and production upstream operation and a pure
play downstream refining and marketing company.
    He said he is hopes to raise 400 mln dlrs in financing for
the new company.
    Hemminghaus said 65 to 75 pct of the new company's earnings
will come from wholesale refining, 20 to 30 pct will come from
the retail sale of gasoline and other items at gasoline
convenience store locations, and five to 10 pct from natural
gas liquids and storage and marketing.
    "Growth will be defined in building retail volumes, jobber
volumes and refining capacity after that," Hemminghaus told
Reuters. He said the new company will have a capital spending
budget of 35 to 55 mln dlrs a year.
   
 Reuter
