Crown sells 150 gas stations, convenience stores in Md., Va.

Firm is to sell or close last 10 outlets by July 31

July 10, 2004|By June Arney | June Arney,SUN STAFF

Crown Central Petroleum Corp. - a name long synonymous with gasoline in Baltimore - announced yesterday that it has sold more than 150 gasoline stations and convenience stores in Maryland and Virginia.

The price on the sale to Petroleum Marketing Investment Group LLC was not disclosed.

Baltimore-based Crown expects to sell or close the fewer than 10 stations it still owns by the end of the month, officials said.

Local consumers aren't likely to detect a change from the sale to Petroleum Marketing.

"Certainly, as far as the Maryland stations go, there is virtually no change in the operation," said Andrew Lapayowker, vice president, general counsel and secretary for Crown. "The same independent dealers that were operating them are still operating them."

The Virginia outlets are to be operated by E&C Enterprises Inc., an affiliate of Petroleum Marketing. E&C runs gasoline and convenience outlets in metropolitan Washington.

Crown began selling off its gas stations and convenience stores in various parcels, in March 2003, Lapayowker said. It also sold its terminals and currently is negotiating the sale of its two refineries.

Lapayowker would provide no estimate for when that transaction might be completed.

"It's been a long time coming, and it's been a very difficult process," said Malcolm M. Turner, a Dallas oil consultant, of Crown's recent sale of gas stations. "It's been a long ordeal for them. I hope they'll be able to get out of the business as they intended a while ago."

Turner, who unsuccessfully tried to broker the sale of Crown's refineries a few years ago, had set their sales price at more than $200 million at that time. Today, he estimates they are worth significantly less - under $100 million.

He expects the sale of the gas stations to bring about $60 million and calculates the sale of the shipping terminals brought $10 million to $15 million.

Crown, which went private in 2001, owes $125 million in debt, which comes due Feb. 1, 2005. It is unclear whether the bondholders will get back all their money.

"If we have the cash to do it, we will pay it back at 100 cents on the dollar," Lapayowker said.

Crown stations have the reputation of being second tier, although some of the locations and the stations themselves are very good, Turner said.

But the value of the company and the brand itself has clearly slid, he noted.

"I think sales of gas are almost 100 percent based on price and location - not brand," he said. "Even 10 years ago, the brand meant something."

Crown, the last vestige of a great Baltimore oil fortune, announced in 2003 that it was putting its assets on the block.

Controlled by Henry A. Rosenberg Jr. and his family, the company was launched by Louis Blaustein, who sold kerosene from a horse-drawn cart early in the last century.

"The question outsiders ask is why did Crown let their assets deteriorate?" Turner said. "The refineries operated at half their capacity, at a time of record margins. We've calculated the Pasadena [Texas] refinery, alone, has left more on the table by not operating efficiently and at capacity during this four-year period than the entire debt. That's sad."

Crown's history

1917: Crown Oil and Refining Co. strikes oil in Texas.

1925: Company begins to produce gasoline. Company incorporated as Crown Central Petroleum Corp.

1930: Louis Blaustein, the Russian immigrant who founded the American Oil Co. in Baltimore in 1910, acquires a 48 percent stake.

1935: Company goes public.

1943: First Crown stations open in Baltimore area.

1966: Henry A. Rosenberg Jr., Blaustein's grandson, becomes president.

1989: Crown acquires La Gloria Oil & Gas Co., including its Texas refinery.

1991-99: Financial condition weakens. Crown posts losses in eight of nine years. The company is also embroiled in a bitter labor dispute with its refinery workers.

March 2001: Crown goes private after being acquired by Rosemore, a Rosenberg-controlled entity.

May 2001: Henry Rosenberg is succeeded by his son, Frank B. Rosenberg, as president and CEO.

Jan. 2003: Crown announces the company is for sale.

March 2002: Frank B. Rosenberg resigns as Crown CEO.

March 2003: Crown begins selling its 315 gas stations-convenience stores.

July 9, 2004: Crown announces sale of about 150 stations in Virginia and Maryland.

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