HRG Group, Inc., formerly Harbinger Group Inc. and Zapata Corporation,
is a
holding company
A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
based in
Rochester, New York
Rochester () is a City (New York), city in the U.S. state of New York (state), New York, the county seat, seat of Monroe County, New York, Monroe County, and the fourth-most populous in the state after New York City, Buffalo, New York, Buffalo, ...
, having originated from an
oil
An oil is any nonpolar chemical substance that is composed primarily of hydrocarbons and is hydrophobic (does not mix with water) & lipophilic (mixes with other oils). Oils are usually flammable and surface active. Most oils are unsaturated ...
company started by a group including future U.S. president
George H. W. Bush
George Herbert Walker BushSince around 2000, he has been usually called George H. W. Bush, Bush Senior, Bush 41 or Bush the Elder to distinguish him from his eldest son, George W. Bush, who served as the 43rd president from 2001 to 2009; pr ...
. In 2009, it was renamed the Harbinger Group Inc.
Early business history
The company traces its origins to Zapata Petroleum Corporation, founded in 1953 by future U.S. President
George H. W. Bush
George Herbert Walker BushSince around 2000, he has been usually called George H. W. Bush, Bush Senior, Bush 41 or Bush the Elder to distinguish him from his eldest son, George W. Bush, who served as the 43rd president from 2001 to 2009; pr ...
, along with his business partners John Overbey,
Hugh Liedtke
John Hugh Liedtke (February 10, 1922 – March 28, 2003) was an American petroleum executive.
Early life
John Hugh Liedtke was born on February 10, 1922, in Tulsa, Oklahoma. During World War II, he served in the United States Armed Forces. Liedtk ...
,
Bill Liedtke
William C. Liedtke Jr (September 27, 1924 — March 1, 1991) was an American petroleum executive, best known as the co-founder of Pennzoil with his older brother J. Hugh Liedtke.
Early life
Liedtke was born in Tulsa, Oklahoma where his fathe ...
, and Thomas J. Devine. Overbey was a "landman" skilled in scouting oil fields and obtaining drilling rights cheaply. Bush and Thomas J. Devine were
oil-wildcatting associates. Their joint activities culminated in the establishment of Zapata Oil.
[ The company was named for '']Viva Zapata!
''Viva Zapata!'' is a 1952 American Western film directed by Elia Kazan and starring Marlon Brando. The screenplay was written by John Steinbeck, using Edgcomb Pinchon's 1941 book ''Zapata the Unconquerable'' as a guide. The cast includes Jean Pe ...
'', a 1952 biographical film starring Marlon Brando
Marlon Brando Jr. (April 3, 1924 – July 1, 2004) was an American actor. Considered one of the most influential actors of the 20th century, he received numerous accolades throughout his career, which spanned six decades, including two Academ ...
as Mexican revolutionary Emiliano Zapata
Emiliano Zapata Salazar (; August 8, 1879 – April 10, 1919) was a Mexican revolutionary. He was a leading figure in the Mexican Revolution of 1910–1920, the main leader of the people's revolution in the Mexican state of Morelos, and the ins ...
. The initial $1 million () investment for Zapata was provided by the Liedtke brothers and their circle of investors, by Bush's father Prescott Bush
Prescott Sheldon Bush (May 15, 1895 – October 8, 1972) was an American banker as a Wall Street executive investment banker, he represented Connecticut in the from 1952 of the Bush family, he was the father of former Vice President and Pre ...
and his
maternal grandfather George Herbert Walker
George Herbert "Bert" Walker Sr. (June 11, 1875 – June 24, 1953) was an American banker and businessman. He was the maternal grandfather of President George H. W. Bush and a great-grandfather of President George W. Bush, both of whom were nam ...
, and their family's circle of friends. Hugh Liedtke was named president, Bush was vice president; Overbey soon left.
According to a CIA internal memo dated November 29, 1975, Zapata Petroleum began in 1953 through Bush's joint efforts with Thomas J. Devine, a CIA staffer who had resigned his agency position that same year to go into private business, but who continued to work for the CIA under commercial cover. Devine would later accompany Bush to Vietnam in late 1967 as a "cleared and witting commercial asset" of the agency, acted as his informal foreign affairs advisor, and had a close relationship with him through 1975.
In 1954, Zapata Off-Shore Company was formed as a subsidiary of Zapata Oil, with Bush as president of the new company. He raised some startup money from Eugene Meyer, publisher of the ''Washington Post
''The Washington Post'' (also known as the ''Post'' and, informally, ''WaPo'') is an American daily newspaper published in Washington, D.C. It is the most widely circulated newspaper within the Washington metropolitan area and has a large nati ...
'', and his son-in-law, Philip Graham
Philip Leslie Graham (July 18, 1915 – August 3, 1963) was an American newspaperman. He served as publisher and later co-owner of ''The Washington Post'' and its parent company, The Washington Post Company.
During his years with the Post Comp ...
.[
]
Zapata Off-Shore accepted an offer from an inventor, R. G. LeTourneau
Robert Gilmour LeTourneau (November 30, 1888 – June 1, 1969), born in Richford, Vermont, he was a prolific inventor of earthmoving machinery and the founder of LeTourneau Technologies, Inc. His factories supplied LeTourneau machines which rep ...
, for the development of a mobile but secure drilling rig. Zapata advanced him $400,000, which was to be refundable if the completed rig did not function, followed by an additional $550,000 together with 38,000 shares of Zapata Off-Shore common stock when it did.
The U.S. government began to auction off mineral rights to the Caribbean, the Gulf of Mexico
The Gulf of Mexico ( es, Golfo de México) is an oceanic basin, ocean basin and a marginal sea of the Atlantic Ocean, largely surrounded by the North American continent. It is bounded on the northeast, north and northwest by the Gulf Coast of ...
, and islands off the Central American coast in 1954, and in the late 1950s and early 1960, Zapata Off-Shore concentrated its business in these areas. In 1958, drilling contracts with the seven largest U.S. oil producers included wells north of Isabela, Cuba, near the island Cay Sal
Cay Sal ( es, Cayo de Sal) is a small island in the Cay Sal Bank between Florida, Cuba, and the Bahamas. It is no longer inhabited.
The Bahamas have an agreement with the U.S. Coast Guard to regularly fly over Cay Sal and other islands in the ban ...
.
In 1959 Bush bought control of Zapata Off-Shore, funded with $800,000,[
] splitting Zapata Corporation into two independent companies with the Liedtkes still in control of Zapata Petroleum. Bush moved his offices and family that year from Midland, Texas
Midland is a city in and the county seat of Midland County, Texas, United States. A small part of Midland is in Martin County.
At the 2020 census, Midland's population was 132,524. It is the principal city of the Midland, Texas metropolitan ...
to Houston
Houston (; ) is the most populous city in Texas, the most populous city in the Southern United States, the fourth-most populous city in the United States, and the sixth-most populous city in North America, with a population of 2,304,580 in ...
for access to the Caribbean through the Houston Ship Channel. But although Zapata Offshore had only a few drilling rigs, Bush set up operations also in the Gulf of Mexico, the Persian Gulf, Trinidad, Borneo, and Medellín, Colombia, and the Kuwait Shell Petroleum Development Company was among the company's clients.
In 1960, Jorge Díaz Serrano
Jorge Díaz Serrano (6 February 1921 – 25 April 2011) was a Mexican politician and engineer, member of the Institutional Revolutionary Party
The Institutional Revolutionary Party ( es, Partido Revolucionario Institucional, ; abbr. PRI) is ...
of Mexico was put in touch with Bush by Dresser Industries
Dresser Industries was a multinational corporation headquartered in Dallas, Texas, United States, which provided a wide range of technology, products, and services used for developing energy and natural resources. In 1998, Dresser merged with its ...
. Dresser was owned by Prescott Bush
Prescott Sheldon Bush (May 15, 1895 – October 8, 1972) was an American banker as a Wall Street executive investment banker, he represented Connecticut in the from 1952 of the Bush family, he was the father of former Vice President and Pre ...
's Yale friends Roland
Roland (; frk, *Hrōþiland; lat-med, Hruodlandus or ''Rotholandus''; it, Orlando or ''Rolando''; died 15 August 778) was a Frankish military leader under Charlemagne who became one of the principal figures in the literary cycle known as the ...
and W. Averell Harriman, and had been George H.W. Bush's first employer upon his graduation from Yale
Yale University is a private research university in New Haven, Connecticut. Established in 1701 as the Collegiate School, it is the third-oldest institution of higher education in the United States and among the most prestigious in the wor ...
, giving him his start in both the oil business and the defense contractor business. Serrano and Bush created a new company, Perforaciones Marinas del Golfo, aka Permargo, in conjunction with Edwin Pauley
Edwin Wendell Pauley Sr. (January 7, 1903 – July 28, 1981) was an American businessman and political leader.
Early life
Born in Indianapolis, Indiana, to Elbert L. Pauley and the former Ellen Van Petten, he attended Occidental College, in nort ...
of Pan American Petroleum, with whom Zapata had a previous offshore contract. The deal with Permargo is not mentioned in Zapata's annual reports, and SEC records are missing. In 1988, a Bush spokesman claimed that the deal lasted only from March to September 1960. However, Zapata sold the oil-drilling rig Nola I to Pemargo in 1964.
Zapata's filing records with the U.S.Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
are intact for the years 1955–1959, and again from 1967 onwards. However, records for the years 1960–1966 are missing. The commission's records officer stated that the records were inadvertently placed in a session file to be destroyed by a federal warehouse, and that a total of 1,000 boxes were pulped in this procedure. The destruction of records occurred either in October 1983 (according to the records officer), or in 1981 shortly after Bush became Vice President of the United States (according to, Wison Carpenter, a record analyst with the commission).
During the Bay of Pigs invasion
The Bay of Pigs Invasion (, sometimes called ''Invasión de Playa Girón'' or ''Batalla de Playa Girón'' after the Playa Girón) was a failed military landing operation on the southwestern coast of Cuba in 1961 by Cuban exiles, covertly fina ...
and the Cuban Missile Crisis
The Cuban Missile Crisis, also known as the October Crisis (of 1962) ( es, Crisis de Octubre) in Cuba, the Caribbean Crisis () in Russia, or the Missile Scare, was a 35-day (16 October – 20 November 1962) confrontation between the United S ...
, Zapata allowed its oil rigs to be used as listening posts. In 1988, ''Barron's Barron's or Barrons may refer to:
*Barron's Educational Series, a publisher of books, as well as college entrance exam preparation classes and materials, now an imprint of Kaplan Test Prep
** B.E.S. Publishing, the former owner of Barron's
* ''Barr ...
'' said Zapata was "a part time purchasing front for the Central_Intelligence_Agency">/nowiki>Central_Intelligence_Agency.html" ;"title="Central_Intelligence_Agency.html" ;"title="/nowiki>Central Intelligence Agency">/nowiki>Central Intelligence Agency">Central_Intelligence_Agency.html" ;"title="/nowiki>Central Intelligence Agency">/nowiki>Central Intelligence Agency/nowiki>."
In 1962, Bush was joined in Zapata Off-Shore by Robert Gow. By 1963, Zapata Off-Shore had four operational oil-drilling rigs—Scorpion (from 1956, the first oil-drilling jackup rig ever built), Vinegaroon (from 1957), Sidewinder, and (in the Persian Gulf) Nola III.
In 1963, Zapata Petroleum merged with South Penn Oil to become Pennzoil.
By 1964, Zapata Off-Shore had a number of subsidiaries, including: Seacat-Zapata Offshore Company (Persian Gulf), Zapata de Mexico, Zapata International Corporation, Zapata Mining Corporation, Zavala Oil Company, Zapata Overseas Corporation, and a 41% share of Amata Gas Corporation.
In 1964, Bush ran for the United States Senate
The United States Senate is the upper chamber of the United States Congress, with the House of Representatives being the lower chamber. Together they compose the national bicameral legislature of the United States.
The composition and pow ...
, and lost; he continued as president of Zapata Off-Shore until 1966, when he sold his interest to Doyle Mize and ran for the U.S. House of Representatives
The United States House of Representatives, often referred to as the House of Representatives, the U.S. House, or simply the House, is the lower chamber of the United States Congress, with the Senate being the upper chamber. Together they ...
.
On September 9, 1965, Hurricane Betsy
Hurricane Betsy was an intense and destructive tropical cyclone that brought widespread damage to areas of Florida and the central United States Gulf Coast in September 1965. The storm's erratic nature, coupled with its intensity and minim ...
struck the coast of Louisiana sinking the oil rig ''Maverick''. There were no deaths, however, $8 million in Zapata assets were lost. A helicopter flew Bush over the area for several days until debris was located. After evidence was submitted to Lloyd's of London
Lloyd's of London, generally known simply as Lloyd's, is an insurance and reinsurance market located in London, England. Unlike most of its competitors in the industry, it is not an insurance company; rather, Lloyd's is a corporate body gov ...
for the loss, they paid Zapata for the claim.
In 1966, William Stamps Farish III
William Stamps Farish III (born March 17, 1939) is an American businessman and a former US ambassador to the UK from 2001 until 2004.
Family and early life
He was an only child, his father, Army Lt. William Stamps Farish Jr., died in a trainin ...
, age 28, joined the board of Zapata.
Decline
Zapata sought to acquire a controlling interest in the United Fruit Company
The United Fruit Company (now Chiquita) was an American multinational corporation that traded in tropical fruit (primarily bananas) grown on Latin American plantations and sold in the United States and Europe. The company was formed in 1899 fro ...
in 1969, but was outbid by AMK Corp. Robert Gow's father, Ralph Gow, was on United Fruit's board of directors.
In the 1970s, under chairman and CEO William Flynn, Zapata expanded its business to include subsidiaries in dredging, construction, coal mining, copper mining and fishing.
By the late 1970s, saddled with weak operations, high debt and low return on investment, the company again began undergoing changes in management and direction. Led by John Mackin, who succeeded William Flynn, the company began selling off some of those businesses and refocused on offshore oil and gas exploration and production.
In 1982, chief operating officer Ronald Lassiter assumed the role of CEO, and presided over a decade of loss-making brought on by the collapse of oil prices. In 1982, Zapata Off-shore became Zapata Corporation. Its stock
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
performed poorly. By 1986, Zapata was one of the bad loans that shook the foundations of San Francisco-based Bank of America
The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank w ...
, with a debt of more than $500 million and a fiscal year loss of $250 million. The company announced several restructurings during those years and managed to stave off bankruptcy, but continued to incur major losses. In 1990 the oil drilling company proposed selling its entire fleet of offshore drilling rigs to focus solely on fishing. The company had not had a profitable quarter in more than five years.
In 1990, Zapata Offshore sold 12 of its drilling rigs to Arethusa Offshore, which a few years later merged with Diamond Offshore
Diamond Offshore Drilling, Inc. is an offshore drilling contractor. The company is headquartered in Katy, Texas, United States, and has major offices in Australia, Brazil, Mexico, Scotland, Singapore, and Norway.
The company operates 15 drilling ...
. Still struggling with debt by 1993, Zapata signed a deal with Norex America to raise more than $100 million through a loan and stock sale. But financier Malcolm Glazer
Malcolm Irving Glazer (August 15, 1928 – May 28, 2014) was an American businessman and sports team owner. He was the president and chief executive officer of First Allied Corporation, a holding company for his varied business interests, ...
, owner of the NFL
The National Football League (NFL) is a professional American football league that consists of 32 teams, divided equally between the American Football Conference (AFC) and the National Football Conference (NFC). The NFL is one of the major ...
franchise Tampa Bay Buccaneers
The Tampa Bay Buccaneers are a professional American football team based in Tampa, Florida. The Buccaneers compete in the National Football League (NFL) as a member club of the league's National Football Conference (NFC) NFC South, South divisio ...
and Premier League
The Premier League (legal name: The Football Association Premier League Limited) is the highest level of the men's English football league system. Contested by 20 clubs, it operates on a system of promotion and relegation with the English Foo ...
club Manchester United
Manchester () is a city in Greater Manchester, England. It had a population of 552,000 in 2021. It is bordered by the Cheshire Plain to the south, the Pennines to the north and east, and the neighbouring city of City of Salford, Salford to ...
, and at the time owner of 40 percent of Zapata, did not want his holdings diluted and filed a lawsuit to block the deal.
Glazer era and the birth of Harbinger Group Inc.
By 1994, the company had come under Glazer's control, after a proxy fight
A proxy fight, proxy contest or proxy battle (sometimes even called a proxy war) is an unfriendly contest for the control over an organization. The event usually occurs when a corporation's stockholders develop opposition to some aspect of the corp ...
. Glazer became chairman of Zapata, replacing Ronald Lassiter, and in 1995 Avram Glazer
Abraham, ; ar, , , name=, group= (originally Abram) is the common Hebrew patriarch of the Abrahamic religions, including Judaism, Christianity, and Islam. In Judaism, he is the founding father of the special relationship between the Jews ...
, son of Malcolm, was named CEO and president of Zapata. De facto headquarters moved from Houston to Rochester, New York. It no longer engaged in exploration, but owned several natural gas service companies. It also produced protein
Proteins are large biomolecules and macromolecules that comprise one or more long chains of amino acid residues. Proteins perform a vast array of functions within organisms, including catalysing metabolic reactions, DNA replication, respo ...
products from the menhaden
Menhaden, also known as mossbunker and bunker and "the most important fish in the sea", are forage fish of the genera ''Brevoortia'' and ''Ethmidium'', two genera of marine fish in the family Clupeidae. ''Menhaden'' is a blend of ''poghaden'' ...
fish. In subsequent years Zapata sold its energy-related businesses and focused on marine protein.
Between 1998 and 2000, Zapata tried to position itself as an internet media company under the "zap.com" name. In July 1998, Zapata announced its plans to acquire several web sites, including ChatPlanet, TravelPage and DailyStocks.com. The company's stock boomed and crashed along with other dot-coms, and on January 24, 2001 the company conducted a 1 for 10 reverse stock split
In finance, a reverse stock split or reverse split is a process by which shares of corporate stock are effectively merged to form a smaller number of proportionally more valuable shares.
A reverse stock split is also called a stock merge. The "r ...
. The venture was cited by many investment journalists as an example of a company jumping on the internet bandwagon without any relevant experience. This period is probably best remembered for Zapata's unsolicited (and unsuccessful) takeover bid of the Excite
Excitation, excite, exciting, or excitement may refer to:
* Excitation (magnetic), provided with an electrical generator or alternator
* Excite Ballpark, located in San Jose, California
* Excite (web portal), web portal owned by IAC
* Electron ex ...
internet portal.
During this period, Zapata also built up a controlling stake in Safety Components International, a manufacturer of air bag fabrics and cushions.
On December 2, 2005, Zapata Corporation Chairman, Avram ("Avi") Glazer, announced the sale of 4,162,394 shares, 77.3%, of Safety Components International to Wilbur L. Ross Jr. for $51.2 million. The company sold its remaining stock in Omega Proteine on December 1, 2006, leaving it with no active subsidiary.
The Glazer family sold its controlling stock of the Zapata Corporation to Philip Falcone's Harbinger Capital
Harbinger Capital Partners is a private hedge fund based in New York City, New York, founded by Philip Falcone. Harbinger is a highly diversified multi-strategy hedge fund. Notable investments have included sub-prime mortgages in the United St ...
in 2009, and the company's name was changed to Harbinger Group Inc. with the ticker symbol HRG on the NYSE
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is by far the List of stock exchanges, world's largest s ...
. In 2010–2011, Harbinger Capital Partners LLC transferred its 54.4% interest in Spectrum Brands
Spectrum Brands Holdings, Inc. is an American diversified company. Headquartered in Middleton, Wisconsin, it was established in 2005 as the successor company to Rayovac Corporation. It is one of the Fortune 500 companies, and among the largest of ...
to Harbinger Group Inc. giving the company controlling interest in that company. Also in 2011 Harbinger Group Inc. acquired the insurance company Old Mutual U.S. Life Holdings, Inc.
In December 2013, Salus Capital (a unit of Harbinger Group) and Cerberus Capital Management
Cerberus Capital Management, L.P. is an American private equity firm,Leaders Magazine"Providing Economic Opportunity: An Interview with The Honorable Dan Quayle, Chairman, Cerberus Global Investments, LLC". specializing in distressed investing. ...
issued a quarter-billion dollars in financing to struggling retailer RadioShack
RadioShack, formerly RadioShack Corporation, is an American retailer founded in 1921.
At its peak in 1999, RadioShack operated over 8,000 worldwide stores named RadioShack or Tandy Electronics in the United States, Mexico, United Kingdom, Austra ...
Corporation. Among the terms of this deal were restrictions which prevented RadioShack from closing more than 200 of its 4275 company-owned retail stores a year and limited its ability to refinance, which proved to be a key obstacle leading to that firm's February 2015 Chapter 11
Chapter 11 of the United States Bankruptcy Code (Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, wheth ...
bankruptcy as the chain was forced to keep more than a thousand unprofitable stores open. Fidelity & Guaranty Life
F&G Annuities & Life, Inc., previously known as Fidelity and Guaranty Life Insurance Company is an American financial company, primarily providing annuities and life insurance. The company was founded in 1959 and is based in Des Moines, Iowa.
K ...
, the insurer backed by Harbinger Group, also has a $50 million stake in the RadioShack bankruptcy. An impairment of $105.0, out of the $150 million net exposure, recognized as of March 31, 2015.
References
Public records
SEC filings of Zapata Corporation
* Zapata Offshore Annual Reports, Microform Reading Room, Library of Congress.
* National Security Archive
of GHW Bush's CIA involvement in the early 1960s.
* United States District Court for the District of Columbia, Civil Action 88–2600 GHR, Archives and Research Center v. Central Intelligence Agency, Affidavit of George William Bush, September 21, 1988.
Zapata
* Franklin, H. Bruce
Mother Jones, March 2006 – extensive article on role of Menhaded in ecosystem and possible results of overfishing. Retrieved February 21, 2006
George H.W. Bush
* Kevin Philips, '' American Dynasty: Aristocracy, Fortune and the Politics of Deceit in the House of Bush'', Penguin (2004), esp. pp. 200–208.
* Joseph McBride, "The Man Who Wasn't There
, ''The Nation'', July 16/23, 1988, p. 42.
* Joseph McBride, "Where Was George?", ''The Nation'', August 13/20, 1988, on the whereabouts of GHW Bush on November 22, 1963.
* Nicolas King, ''George Bush: A Biography.''
* Anthony L. Kimery, "George Bush and the CIA: In the Company of Friends", ''Covert Action Quarterly'', Summer, 1992.
* ''The Mafia, CIA & George WBush'', Pete Brewton, S.P.I. Books, 1992
CIA
*Beschloss, Michael R. 1991. ''The Crisis Years: Kennedy and Khrushchev, 1960–63'' Edward Burlingame Books, p. 89 refers to "Operation Zapata" as the codename for the Bay of Pigs operation.
*Bissell, Richard M. Jr., with Jonathan E. Lewis and Frances T. Pudlo. 1996. ''Reflections of a Cold Warrior: From Yalta to the Bay of Pigs'' Yale University Press
Others
* Daniel Yergin, ''The Prize'', (1991).
External links
{{Finance links
, name = HRG Group Inc.
, sec_cik = 0000109177
Agriculture companies of the United States
Holding companies of the United States
Companies formerly listed on the New York Stock Exchange
2018 mergers and acquisitions
Defunct oil companies of the United States