Crown Central Petroleum, the last visible remnant of a great Baltimore oil fortune, is going, going ...
Of course, you could have said that a year ago, when Crown disclosed that it was putting its assets on the block. But the fullness of time, a healthier oil industry and a ticking debt bomb seem to be pushing a Crown sale closer to reality.
Malcolm M. Turner, a Dallas oil consultant who tried unsuccessfully to broker Crown's refineries a couple of years ago, says the Baltimore-based company has struck "numerous agreements" to unload gasoline stations, shipping terminals and a refinery in Tyler, Texas.
A sale of the refinery alone would be highly significant. Though not signed and sealed, the deal would fulfill years of selling effort by Crown, which grew out of the Amoco oil empire founded by Baltimore's Blaustein family a century ago.
Crown has granted Dallas-based Holly Corp. exclusive rights to negotiate for the Tyler plant, and "Holly is hot on the sale," says Turner. "It almost certainly is going to do the deal."
Crown is saying almost nothing, and Holly's chief financial officer did not return phone calls. But Turner's account is corroborated by Thomas Kloza, chief oil analyst for Oil Price Information Service, a Lakewood, N.J., data outfit, who says Crown and Holly "are pretty close to a deal."
And deals are close for other Crown assets, too, according to several people familiar with the company.
"They're kind of in a wind-down mode, almost," said Kenneth Austin, a debt analyst for Moody's Investors Service who downgraded Crown's junk bonds a few months ago. "They are talking to the banks. Something's being worked out."
He declined to go into further detail, noting that Crown's stock is not publicly traded. But Oil Price Information Service has reported that Crown struck agreements to sell shipping-terminals in Norfolk and Richmond, Va., and Selma, N.C., as well as several dozen gas stations and convenience stores in eastern North Carolina.
Convenience Store News reported in September that an Israeli company was exploring the purchase of a U.S. convenience-store and gas-station chain, "likely" Crown's.
Andrew Lapayowker, Crown's general counsel, declined to comment except to say Crown was able to make the semiannual interest payment - I figure it was about $6.8 million - due on its bonds last week. He wouldn't say how many people work for Crown these days.
The bonds are critical to Crown's attempted dissolution and ultimate fate. Next Feb. 1, the company must disgorge $125 million to pay them off. It doesn't have the money and, because it has struggled financially, it might not be able to find a new loan.
Controlled by Blaustein descendent Henry A. Rosenberg Jr. and his family, who in recent years still owned substantial amounts of BP Amoco stock, Crown has been trying to unload assets for a long time. But as the debt deadline gets closer, the company has become less choosy about how it dismembers itself.
The first plan was to sell just the Tyler facility and a larger Crown refinery in Pasadena, Texas, and hold onto about 300 gas stations that would make up the Crown business going forward. But that didn't go anywhere, so early last year Crown announced plans to sell all of its assets. Originally, the Tyler and Pasadena refineries were marketed as a package, but now the Tyler plant, which Turner says is profitable, looks as though it might go as a separate deal.
Numerous parties have been interested in Crown's refineries over the years, but few had the wherewithal. Holly does. It earned $17.6 million in its latest quarter, thanks partly to improved industrywide refining margins. Its stock is up to $27 after sinking to $5 in 2000.
And the Tyler plant seems a perfect fit. Holly's planned merger with Frontier Oil blew up last year, but it still wants to grow. Adding the Tyler refinery, which Turner figures will fetch about $35 million, would still allow Holly to qualify for small-refiner environmental exemptions.
None of this guarantees that Crown's bondholders will get back all their money. The unsecured bonds trade for only 65 or 70 cents on the dollar, reflecting skepticism that the ultimate proceeds from Crown's dissolution will fully cover the loan.
But it seems likely that the Baltimore-based oil operations launched by Louis Blaustein, who sold kerosene from a horse-drawn cart early in the last century, are nearing an end.