For Immediate Release: April 3, 2000

Contact: Sanford Lewis, 617/489-3686

Shareholders Allege Crown Central Petroleum Stock Offers May Be Underpriced by Company's Disclosure Practices

Complaints Filed with Securities and Exchange Commission

CROWN CENTRAL PETROLEUM (CCP) SHAREHOLDERS complained today to the Securities and Exchange Commission (SEC) that the company, in its just released 10K report and in prior SEC reports, failed to detail the material effects of its labor dispute and other mismanagement. The complaint asserts that the company's reporting on its operations may have depressed currently pending buy-out offers. According to the complaint, recent data showed a consistent decline in retail gasoline sales volumes at Crown Central Petroleum stores during a labor-led boycott from 1997-1999.

According to Attorney Sanford Lewis, who filed the complaint with the SEC, "The stock prices offered by proposed purchasers might be substantially higher if Crown management had better disclosed how severely the boycott and management induced problems have hurt returns. Under new, better management, the company could be worth almost twice the value of current cash bids."

Current cash offers to purchase Crown shares, proferred by Rosemore Inc.( a closely held company affiliated with Crown's management) and Apex Oil Inc. range from $92 to $93.5 million. A stock exchange offer from Apex Oil could be worth $120 million. But one Wall Street analyst has put the actual value of company assets at $170 million. According to the shareholders who complained to the SEC, one source of this underpricing may be the failure to report on, and allow the market to reflect, the boycott's actual impacts.

The complaint asks the SEC to order Crown to undertake more detailed disclosures prior to the consummation of current proposed stock sales, including:

  1. Stating whether the labor dispute has had or may in the future pose a material impact on the corporation.

  2. Estimating any impacts on retail gasoline sales volumes, pricing strategies and income caused by the boycott, and to identifying all assumptions and investigative techniques used in developing such estimates.

  3. Reporting on the specific costs of litigation which the company attributes to responding to the labor dispute and the union's corporate campaign.

  4. Quantifying the number of hours Crown management has expended in response to the labor dispute and activities that the company believes are related to that dispute, and whether such activities have posed an impact on their other managerial obligations.

  5. Requiring additional disclosures regarding the company's misadventures in the oil futures market as the SEC deems appropriate.

The complaint filed April 3 followed prior complaints by the same shareholders on August 25 and Dec. 16, 1999 alleging among other things that the company had failed to disclose:

  • The existence and effects of the boycott resulting from the lockout. (The company reported to shareholders the existence of the boycott only after shareholders complained to the SEC about nonreporting of its existence.)

  • Certain environmental proceedings and penalties, including a $1.1 million air pollution fine reported in its quarterly report but not its annual report.

    Sanford Lewis, the attorney who filed the complaint with the SEC, is a lawyer specializing in corporate accountability to shareholders and other corporate stakeholders.

    Copies of the complaints and graphic charts showing gasoline sales volumes before and after the boycott are available online at: http://home.earthlink.net/~gnproject/crown.htm 

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Sanford Lewis
Strategic Counsel on Corporate Accountability
PO Box 79225
Waverly, MA 02479
USA

617/489-3686

Holding corporations accountable to community, 
labor and shareholders

Email: gnproject@earthlink.net

Consultancy:
http://home.earthlink.net/~gnproject/strategiccounsel.htm

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