Apex raises ante for Crown

St. Louis challenger to Rosenbergs offers $10.50 share in cash


July 18, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

The St. Louis oil company that has been trying for months to take over Crown Central Petroleum Corp. has again upped the ante in the bidding war for the Baltimore-based refiner.

Apex Oil Co. Inc., according to documents filed yesterday with the Securities and Exchange Commission, raised its offer to $10.50 a share in cash - 50 cents more than its last offer and $1 higher than what Crown's controlling family has bid.

Rosemore Inc., a holding company headed by Crown's chairman and chief executive, Henry A. Rosenberg Jr., wants to pay $9.50 for all the outstanding shares of Crown that it doesn't already own and take the refiner private.

Crown's board has already accepted Rosemore's offer, but shareholders have yet to vote on it and Crown officials say the board will consider competing bids while the refiner moves ahead on completing the Rosemore deal.

Through Rosemore, the Rosenberg family controls 11 percent of Crown's Class B stock and 49 percent of the Class A stock, which has 10 times the voting power of the B shares.

Paul A. Novelly, chief executive of Apex, and his associates own 14.70 percent of the A shares and 3.48 percent of the B shares.

An oil industry analyst, who asked not to be identified, said that just because the Apex offer is 10 percent higher than Rosemore's doesn't mean it's the better choice; the Apex deal may have more contingencies associated with it.

"It's not necessarily an offer without strings attached," the analyst said.

Jim Sanders, counsel for Apex, said there are some financing contingencies attached to the offer but, he noted, yesterday's filing states that Apex is willing "to provide [Crown's board] adequate assurance of Apex's cash resources for the proposed transaction."

Apex made the $10.50 offer Friday at a meeting with Michael F. Dacey, head of Crown's special committee of independent directors. Dacey did not return calls yesterday.

But Crown spokesman J. Steven Wise said his company has not received a revised proposal and will not comment on it until the offer is formally received.

Along with its cash offer, Apex is still also offering a stock-for-stock merger, which it says would value Crown's stock at $10.50 a share.

A portion of that offer was amended, according to yesterday's filing, to make the deal more attractive to shareholders.

Apex said in the filing that, should a stock-for-stock merger occur, if the average closing price of the new company's shares failed to reach $12.50 per share for any period of 20 consecutive trading days for one year after the merger, Apex would pay the difference between $12.50 and the highest 20-day average closing price for that year.

The previous shortfall distribution proposal set the benchmark at $12 and used a five-day period.

The future of Crown, which has been based in Baltimore for 70 years, has been uncertain since it hired Credit Suisse First Boston in February 1999 to review the refiner's "strategic alternatives," which could include selling the company.

In early March, Rosemore offered $8.35 a share for Crown's outstanding shares. Apex countered with a bid of $9.20 a share, and the two competitors incrementally raised their bids.

Crown has been racked by losses - losing money in eight of the past 11 years - but recently its fortunes have turned around. In a statement aimed at providing shareholders with a clearer view of the company's situation, Crown said last month that it netted a total of $8 million in April and May thanks to better refining margins.

Shares of Crown's more widely traded B shares closed unchanged yesterday at $9.50.

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