Pennzoil Co. has filed a lawsuit against shareholder Guy Wyser-Pratte and his investment firm to force them to correct allegedly false and misleading statements in his proxy bid for a seat on the company's board.

In a suit filed Thursday in Wilmington, Del., Pennzoil said Wyser-Pratte, one of the company's most vocal critics, did not make important disclosures in the materials he sent to shareholders. Wyser-Pratte said Pennzoil's lawsuit was silly. "It is frivolous. There is nothing true in all their allegations. We're going to strike back and sue Pennzoil," Wyser-Pratte said Friday from his Wall Street office. Wyser-Pratte said he will file a lawsuit within two weeks, targeting a series of corporate governance changes Pennzoil announced that are designed to make it more difficult for him to win approval for several of his proposals.

No right to say no to an offer
The Houston energy company is scheduled to conduct its annual meeting on May 7. There are two seats on the board up for election and Wyser -Pratte is one of three nominees for those seats. He has nominated himself, the first time in Pennzoil's history someone has done that, said Pennzoil spokesman Robert Harper. Wyser -Pratte last year criticized Pennzoil's board for fighting off Union Pacific Resources Group's $4.2 billion hostile takeover bid, made last June. The Fort Worth company offered $84 per share, causing the stock to rise from $60 a share to almost $80 a share. The Pennzoil board unanimously rejected the bid, and its stock sank back to the 60s last October when Pennzoil successfully fended off Union Pacific. "On the fundamental basis, they didn't have the right to say no to an offer at $84 a share when they were trading at $59," said Wyser-Pratte, adding, "It is a common thing in the U.S. to sue somebody for anything just to paralyze his actions." In its lawsuit, Pennzoil charged Wyser-Pratte, among other things, with misleading and false information in the following areas:

1) Ownership of shares. Wyser-Pratte and his Wyser-Pratte & Co. hold about 454,200 common shares. But Pennzoil maintains it doesn't really know how many shares he owns as an individual.

2) Financing of proxy solicitations. Pennzoil said it is unclear who is financing Wyser-Pratte's solicitation. The company contends Wyser-Pratte first says he is providing the financing, then says in his materials he is soliciting financing on behalf of himself and his company, then later states he plans to seek reimbursement from Pennzoil.

3) Disclosure of Wyser-Pratte's personal economic interests. Penn-zoil said that Wyser-Pratte has called himself a shareholder interested in maximizing the value of his shares. However, since his company invests for its clients in arbitrage transactions and collects fees based on performance, Wyser-Pratte "has an interest in creating short-term gain for clients to maximize his own compensation," Harper said.

4) Justification for proposals. Wyser-Pratte has submitted a proposed bylaw on withdrawal of a shareholders' rights plan and suggests if it had been in effect at the time of Union Pacific Resources' offer, the Pennzoil board could not have maintained the rights plan with the consent of Pennzoil shareholders. Pennzoil maintains this is false and misleading. because the offer would not have constituted an offer under Wyser-Pratte's proposed bylaw amendment.