July 13, 1980, Sunday, Late City Final Edition

SECTION: Section 3; Page 11, Column 1; Financial Desk

LENGTH: 1106 words

HEADLINE: THE MAN WHO WON MCCULLOCH OIL

BYLINE: By PAMELA G. HOLLIE

DATELINE: LOS ANGELES

 BODY:    Charles E. Hurwitz looks out of place in the executive suite of 
the McCulloch Oil Corporation here. His dark, conservative, three-piece 
suit clashes with the suede and leopard chairs, the white carpets, the 
enormous dark marble desk with silver accents and the gray and red walls 
in the office once occupied by the company's late founder, Robert P. 
McCulloch, developer of the chain saw and the man who bought the London 
Bridge and moved it to Lake Havasu City, Ariz.

   The offices, like the name McCulloch Oil Corporation, reflect a former 
style and a former management. Mr. Hurwitz, a 40-year-old Houston 
financier who gained control of the company two years ago and was named 
chairman and chief executive officer last March, represents the new 
style, the new management and the new company, whose name has been 
changed to MCO Holdings Inc.

   In the last two years, Mr. Hurwitz has picked new officers; initiated 
a reorganization in which $90 million in assets were sold; spun off 
energy assets into MCO Resources Inc., a separate publicly traded 
company, and shifted the company's focus from real estate toward energy 
development. While the company had an earnings high of only $2 million 
before 1977, net income reached $58.8 million last year on revenues of 
$77.4 million, helped by several large extraordinary gains.

   The changes might make MCO an appealing takeover target, but last week 
Mr. Hurwitz won shareholder approval of a measure that makes unwanted 
takeovers more difficult. It requires a 75 percent vote of company shares 
to make changes in the charter, calls for staggered election of directors 
and bars nominations of board members from the floor at annual meetings. 
There's some irony in that, for Mr.  Hurwitz's position at MCO is the 
result of just the sort of raid he has now foreclosed.

   Mr. Hurwitz first began to take control of McCulloch Oil in 1978, 
despite company objections, when he acquired 13 percent of its stock from 
the Black & Decker Manufacturing Company and won representation on the 
board through nominations from the floor at the 1978 annual meeting.

   When he began his takeover, no one at McCulloch had heard of Charles 
Hurwitz, even though the quiet-spoken son of a clothing store owner in 
Kilgore, Tex., owned his own brokerage firm by the time he was 24 and 
went on to build a reputation as one of the new breed on Wall Street.


                                                                       
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   But in 1970, he ran into obstacles. Just as he was taking his firm, 
Summit Group Inc., public, he was drawn into a Securities and Exchange 
Commission investigation and a suit that named 40 individuals in a scheme 
to artificially inflate the price of a company called Hair Extension. ''I 
had an offering at the time and I had to get clear of the S.E.C.,'' said 
Mr. Hurwitz. ''I thought about it for a while and decided to accept the 
consent decree with the addition of a denial in the settlement - not that 
that means anything to anyone but me.''

   In 1977, Summit also came under the scrutiny of the New York 
Superintendent of Insurance. Three years before, a Summit subsidiary had 
suffered from the general downturn of the insurance industry. It was 
declared insolvent and was liquidated in 1975. The state insurance office 
filed a lawsuit charging Mr. Hurwitz and his affiliated companies with 
fraud, mismanagement and breach of fiduciary responsibilities in the 
insurance company's collapse. The suit was dropped last year.

   Partially as a result of these experiences, but mostly because he is a 
private man, Mr. Hurwitz prefers remaining behind the scenes in his 
dealings. For the last seven years, most of his transactions, including 
the bid for McCulloch, have been conducted through the Houston-based 
Federated Development Company, a business trust he controls.

   ''McCulloch was something that Black & Decker wanted to sell its 
position in,'' said Mr. Hurwitz, who recalled that investors were not 
exactly clammering to buy McCulloch shares in 1978. The company was 
slowly recovering from a $60 million loss in 1976. The following year, 
the company founder died from a combination of drugs and alcohol.

   By 1978, the company had improved somewhat, but its oil and gas 
production was declining and it had lost $63 million over a two-year 
period on its troubled real estate operations. (In 1977, a subsidiary 
pleaded guilty in a Colorado court to 19 misdemeanor counts of criminal 
fraud in connection with sales at its 69,000-acre Pueblo West 
subdivision, and the Federal Trade Commission, the Department of Housing 
and Urban Development and the S.E.C. are still investigating certain land 
purchases and development projects.)

   But Mr. Hurwitz saw a silver lining in the company's oil and gas 
reserves, its gas processing plants and its natural gas transmission 
lines. Besides, it only cost him $10 for the option to Black & Decker's 
2.2 million McCulloch Oil shares. Black & Decker had received the shares 
in 1973 when it acquired an affiliate, the McCulloch Corporation, a chain 
saw maker. Mr. Hurwitz's option was for 13 percent of McCulloch Oil, 
essentially controlling interest since brokerage firms held a bit more 
than half of the company's stock and the rest was widely distributed. The 
price was about $3.50 a share, a total of $8 million.

   Despite opposition from McCulloch management, Mr. Hurwitz exercised 
his option and voted his shares at the 1978 annual meeting. His two 
nominees, George Kozmetsky, dean of the Texas University business school, 
and Ezra Levin, a New York lawyer, were elected to the board and Mr. 
Hurwitz was elected a few months later. The company's chairman, C.V. Wood 
Jr., resigned in July 1979, and the post remained vacant until Mr. 
Hurwitz became chairman and chief executive last March.



                                                                       
PAGE    9                    (c) 1980 The New York Times, July 13, 1980                   


   Mr. Hurwitz also replaced Merlin M. Witte, who was president of 
McCulloch Oil in 1977 and 1978, with  William C. Leone,  a long-time 
friend. Mr. Witte, who found Mr. Hurwitz to be an ally in his plan to 
spin off most of the company's energy assets, is now president of MCO 
Resources Inc.

   Today, MCO's board is composed entirely of Hurwitz supporters.  There 
were once 13 members, including Robert McCulloch Jr., son of the founder, 
who resigned a year ago. The board now has seven members, and Mr. Hurwitz 
has a clear mandate to continue to shape the company's future.

GRAPHIC: Illustrations: PHOTO OF CHARLES HURWITZ

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