Crown moving to go private

Rosemore to offer $8.35 per share

Apex isn't talking

Poison-pill sequel

Oil industry

March 08, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

Crown Central Petroleum Corp., a Baltimore institution since 1930 whose executives have been civic leaders, said yesterday that it plans to buy out shareholders and go private.

The move comes amid a falling share price, several years of multimillion-dollar losses, disgruntlement among investors and a hostile takeover attempt by a St. Louis oil company.

Crown early last year hired an investment bank to find "strategic alternatives" for the company that could have included selling all or part of its assets.

Under the plan announced yesterday, Rosemore Inc., a holding company controlled by Crown Chairman Henry A. Rosenberg Jr. and his family, will offer stockholders $8.35 for each of their shares. That's 13 percent more than Monday's Class B closing price of $7.375, but far less than the $36 the shares were worth in 1989.

Yesterday's announcement comes just one month after Crown's board approved a poison-pill measure aimed at warding off hostile takeovers.

In November, Paul A. Novelly, who with his partners in Apex Oil Co. of St. Louis holds nearly 15 percent of Crown's Class A shares, proposed a merger in which Rosenberg would be ousted and Novelly would run the company.

Novelly, who had been acquiring Crown shares since the mid-1980s, could not be reached for comment yesterday.

Jim Sanders, counsel for privately held Apex, declined to discuss Crown's plan to go private or what counter-actions Apex might take. When asked if Apex officials were upset, he said, "We have no comment at this time, but you can draw your own conclusions."

Rosemore owns 49 percent of Crown's Class A voting shares and 11 percent of the Class B shares, which have one-tenth the voting power.

Crown is now going through the process of seeking unanimous approval from its board of directors for going private. Six of the eight directors are elected by Class A shareholders and two are chosen by Class B shareholders. Should the board approve the measure, then the deal would need the approval of at least two-thirds of Crown shareholders. The board has until Friday to reject or accept the offer.

Rosenberg did not return calls yesterday.

Crown has posted losses in eight of the past nine years, and last month reported a 1999 net loss of $30 million, or $3.04 per share, on sales of $1.27 billion. In 1998, it lost $29.4 million, or $2.99 a share, with revenue of $1.3 billion.

Its Class A shares closed 62.5 cents higher yesterday at $7.75, and the Class B shares closed at $7.875, up 50 cents.

Edward L. Rosenberg, son of Henry Rosenberg, resigned from his post as executive vice president for supply and transportation at Crown in December 1998 and is now president and chief executive of Rosemore.

He said that, despite the fact that his father is chairman of both companies, Rosemore officials were not privy to information about any other offers for the company that might have been made. Crown, he said, invited Rosemore to make an offer.

He said his father has "had to excuse himself from many meetings and many discussions and has always been careful about how he's run the business."

He declined to say what Rosemore plans to do with Crown.

Refining is "a very risky business and a very brutal business, and so what the future may hold, who knows?" he said. "Maybe somebody else may want to make a bid and see if they can do better."

Crown spokesman J. Steven Wise would not discuss whether Credit Suisse First Boston, the firm hired to find strategic alternatives for the refiner, had received offers other than those from Rosemore and Apex.

Crown has been in a dispute with workers at its Pasadena, Texas, refinery who have been locked out since February 1996. Joe Drexler, director of special projects for the Paper, Allied-Industrial, Chemical & Energy Workers Union International (PACE), said many of the locked-out workers own shares of Crown -- either purchased outright or as part of a retirement package -- and they will be hurt by yesterday's proposal.

However, he also said he thinks that his group's boycott of Crown and what he described as poor management by the Rosenbergs led to the stock's decline. But, he said, he didn't think the union had shot itself in the foot with its effort.

"Absolutely not, they laid down the gauntlet and went to war with us," he said. "We were put in the position of doing what a union does and that is defend our members."

Crown has 2,700 employees, 180 of them in Baltimore. Its Pasadena refinery can process 100,000 barrels a day, and another refinery, in Tyler, Texas, has a capacity of about 52,000 barrels a day. Crown also operates 331 gasoline stations and convenience stores.

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