DEC. 19, 2000--THE SAGA OF Crown Central Petroleum Corp. took another turn yesterday as the Baltimore-based oil refiner agreed to merge with Rosemore Inc., which had already been turned down in its initial effort to buy the company.

Shareholders of Crown had voted down a bid by Rosemore to buy the company for $9.50 per share, but a new offer of $10.50 per share was agreed to yesterday. Missouri-based Apex Oil Co. Inc. had been competing with Rosemore to gain control of Crown, but that company unexpectedly dropped out of the running and is now supporting Rosemore's bid.

J. Steven Wise, Crown's manager of corporate and government affairs, said that Rosemore was in talks with Apex and its CEO, Paul Novelly, who is a shareholder of Crown, about taking over negotiations to buy the company. Officials at Rosemore first wanted to ensure that the deal would be an approved transaction and not trigger a poison pill measure adopted by Crown's board, which prevents any potential buyer from acquiring the company without its approval.

"Rosemore came to Crown saying that it had negotiated a transaction in principal with Novelly," Wise said. "Before it went forward, it wanted an understanding that it would be an approved transaction under the shareholder rights plan."

Rosemore, which like Crown is based in Baltimore, is controlled by the Rosenberg family, which runs Crown and which owns, directly or indirectly, approximately 49 percent of Crown's Class A common stock and 11 percent of Crown's Class B common stock.

Under the merger agreement, Crown will become a wholly owned subsidiary of Rosemore, but continue to operate as a separate company under its current name.

The purchase price of $10.50 per share represents a 31.25 percent premium to the market price of $8 per share price for Crown's Class A stock, and a 50 percent premium to the $7 per share for Class B stock.

The deal is valued at about $106 million. The merger was approved unanimously by Crown's committee of independent directors, and is expected to be completed by the first quarter 2001.

Apex spokesman Andrew Cole declined to comment on the record about the merger agreement. However, Apex, which also offered to buy Crown for $10.50 per share, was successful in setting the bar for what it thought was a fair price for the company, and then stepped back to let Rosemore pay the cost.

The merger agreement is subject to another vote by shareholders, who were cool to Rosemore's first attempt to buy the company, and voted down the bid in August. Joseph Drexler, director of special projects for the Paper, Allied-International, Chemical and Energy Workers International Union (PACE), has been an outspoken critic of Crown Chairman Henry A. Rosenberg Jr. and Rosemore, but had little to say about the latest development. .

Union members have been locked out of Crown’s Pasadena, Tex. oil refinery plant since 1996.

On Oct. 11, Crown announced it had reached a tentative collective bargaining agreement with the union. However, on Oct. 17, the union announced that its members rejected a contract proposal by Crown.

"Obviously, Novelly has given up," Drexler said. "We do not have a position yet. But investors who have relationships with union pension funds and others are very interested in what is happening with the company."

Last Thursday, Crown Central Petroleum Corp. approved a new board of directors at its annual meeting, much to the dismay of the AFL-CIO, which alleges the appointees would create unfair advantages within the company.

Nominated to the company's board of directors for Class A stock were Rosenberg, Crown's chairman; Frank B. Rosenberg, a Crown vice president and son of Henry A. Rosenberg Jr.; Stanley A. Hoffberger, a private real estate developer; Barry L. Miller, chief financial officer of Rosemore Inc.; John E. Wheeler Jr., Crown’s chief financial officer; and Michael F. Dacey, a private investor.

Jack Africk, the former vice president of UST Inc., and the Rev. Harold Ridley, president of Loyola College, were nominated by holders of Class B shares.

© 2000 The Daily Record