St. Louis company seeks Crown

Apex Oil Co. Inc. offers challenge to Rosemore bid

Oil industry

March 11, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

Henry A. Rosenberg Jr.'s plans to keep control of Crown Central Petroleum Corp. were put on hold yesterday when another oil company made a bid for the troubled Baltimore-based refiner.

A proposal from a company controlled by Rosenberg, Crown's chairman, to buy the refiner's outstanding shares and take it private was set to expire at 5 p.m. yesterday. It was extended for a week after Apex Oil Co. Inc. of St. Louis made a last-minute proposal that offered shareholders even more for their stock.

Rosemore Inc., run by Rosenberg and his family, owns about 50 percent of Crown stock. It had proposed paying $8.35 a share for the remaining stock in the company.

But yesterday, Apex said it would pay $9.20 a share. That offer also expires Friday.

Crown's widely traded Class B shares, which traded as high as $36 in 1989 and as low as $4.625 in December, gained $1 yesterday to close at $8.75.

Yesterday's developments were the latest round in what has become a messy fight for control of the cash-hemorrhaging company. One shareholder lawsuit has been filed alleging that Crown officials are only looking out for their best interests, and analysts say more could be on the way.

In November, Apex Chief Executive Officer Paul A. Novelly proposed a merger of the two companies. Novelly's plan called for him to replace Rosenberg for a three-year term after the merger. Crown officials, who in February 1998 hired Credit Suisse First Boston to help them find "strategic alternatives" that could include selling all or part of the company, have declined to comment publicly on Novelly's proposal other than to say it would be considered.

As for the latest Apex offer, Crown spokesman J. Steven Wise said the board "will be considering it between now and next Friday."

Rosenberg, 70, could not be reached for comment.

Jon Kyle Cartwright, senior fixed-income analyst at Raymond James Financial Center in St. Petersburg, Fla., said bond holders would be delighted if the Apex deal is successful; it would trigger a change-of-control clause and bond holders would receive 101 percent of the bonds' face value.

Crown has $125 million in bonds that come due in February 2005 that are trading at 78 percent of their value, he said.

"It's questionable in my mind that this company would survive to 2005," he said.

Cartwright noted that the Rosemore offer does nothing to address the fundamental problems of Crown -- that it is a "tiny regional player in an industry of giants."

If the Rosemore offer is approved, Crown "could have weaker credit, its bonds would trade down even further and you would not have solved any of the problems plaguing Crown now," Cartwright said. "So as a bond holder you just get massacred."

Although Cartwright said he believes that Apex sincerely wants to acquire Crown, others see Novelly's move as a way to force Crown to offer more money for shareholders' stock.

"Somebody is misunderstanding the stance and positions of the parties if that's what they are saying," said Jim Sanders, counsel for Apex.

Crown, which employs 180 people in Baltimore and 2,700 nationwide, 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.

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