Crown board nears deadline

Two takeover offers for troubled refiner to expire today

Petroleum

March 17, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

The board of directors at Crown Central Petroleum Corp. has until 5 p.m. today to reject or accept two competing takeover proposals, both of which would mean the 70-year-old company would become privately held.

The first offer came from Rosemore Inc., a Baltimore holding company headed by Henry A. Rosenberg Jr., who is Crown's chairman, president and chief executive officer. The Rosenberg family, through Rosemore, controls 11 percent of Crown's Class B shares and 49 percent of the Class A shares, which carry 10 times the voting power of the B shares.

On March 7, Rosemore offered to buy the outstanding Crown stock it does not already own for $8.35 a share.

The troubled Baltimore-based refining company has lost money in eight of the past nine years, and in February reported a 1999 net loss of $30 million, or $3.04 per share, on sales of $1.27 billion.

Crown's widely traded Class B shares, which traded as high as $36 in 1989 and as low as $4.625 in December, closed yesterday at $7.875, up 12.5 cents.

Just before Rosemore's proposal was set to expire March 10, another bid came in offering a higher price.

Apex Oil Co. Inc. of St. Louis, which owns about 15 percent of the Class A shares, said it would pay $9.20 a share.

Rosemore then extended its offer, and both proposals are to expire this afternoon.

This is Apex's second try for Crown.

In November, Apex Chief Executive Officer Paul A. Novelly sent a letter to Crown's board proposing a merger: "The Novelly Group is not satisfied with its investment in Crown nor do I believe you are satisfied with the performance of Crown's stock. However, we believe that Crown still can be a good investment, and we believe that the underlying assets can be deployed in a profitable manner."

Crown officials said the merger offer would be reviewed by Credit Suisse First Boston, which was hired in February 1999 to find "strategic alternatives" for the refiner.

Now Crown's independent directors -- which include everyone on the eight-member board except Rosenberg -- have two deals from which to choose.

Analysts say shareholder lawsuits should be expected if the directors choose the Rosemore deal; one was filed after Rosemore made its original pitch.

The plaintiff, a member of the union that was locked out of Crown's Pasadena refinery in 1996, alleges that the Rosenbergs are not taking shareholders' best interests into account.

Crown spokesman J. Steven Wise said yesterday that it is unclear what the board will decide.

"They're thoroughly reviewing both proposals," he said, "and are mindful of [today's] deadline."

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