Crown shares finally bounce

Company's brass to evaluate Novelly merger proposal

Oil industry

November 13, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

Shares of Crown Central Petroleum Corp. have risen since one of its major shareholders proposed that his oil company merge with the struggling Baltimore-based refining operation.

Crown's voting A shares, which had fallen from above $40 in June 1989 to under $6 this week, closed yesterday at $7. The nonvoting B shares went from a closing price Tuesday of $5.625 to $6.5625 yesterday.

In a Nov. 8 letter to Crown's board, made available Wednesday by the Securities and Exchange Commission, Paul A. Novelly, chief executive officer of Apex Oil Co. in St. Louis, proposed a merger of the two companies.

Novelly's plans call for him to replace Crown's chairman, Henry Rosenberg, for a three-year term after the merger. Crown officials said yesterday that they would evaluate the proposal.

The company hired Credit Suisse First Boston in February to help it find "strategic alternatives," which could include selling all or part of the company.

"Crown's Board will consider the [Novelly] letter in the course of its review of strategic alternatives," the company said in a statement yesterday.

Crown spokesman J. Steven Wise said Rosenberg was traveling in Europe and was unavailable for comment. He added that Credit Suisse was under no deadline for recommending proposals.

Novelly's move was hailed yesterday by union members who have been locked out of Crown's refinery in Pasadena, Texas, since early 1996. The union launched a boycott shortly thereafter.

Novelly's letter said a merger would be contingent upon a "satisfactory resolution of the current union boycott against" Crown.

"It's a proactive statement on their part," Joe Drexler, director of special projects for the Paper, Allied-Industrial, Chemical and Energy Workers (PACE) International Union, said yesterday. "I wouldn't necessarily characterize it as pro-union, but I would characterize it as a sense of realism on the part of Apex realizing nothing is resolvable unless the boycott campaign is resolved."

Drexler said the two sides have met twice in recent months for discussions led by the federal Mediation and Conciliation Service, but that so far "very little progress, if any, has been made."

The Novelly Group holds 698,375 Class A voting shares of Crown and 174,400 Class B nonvoting shares. Any deal would likely need the approval of the Rosenberg family, which holds about 49.85 percent of the Class A shares.

Novelly's proposal calls for Crown to issue shares to privately held Apex of newly issued Class A common stock equal to 35 percent of Crown's outstanding common stock.

Apex employs about 800 workers and had sales in 1997 of $1 billion.

Pub Date: 11/13/99

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.