Crown didn't mention the union when it reported yet another quarterly loss Thursday -- of 816.6 million (81.68/share), bringing the loss for 1998 to 829.4 million (162.99/share) -- instead attributing the poor results to the global oil glut and "overcapacity in all segments of the domestic refining industry." Neither did it explicitly announce it was on the block.
Rather, Rosenberg was quoted as saying that Crown had engaged Credit Suisse First Boston (CSFB) as financial adviser. "We are looking to maximize our excellent assets in both refining and retail businesses," he said, according to a company press release. "The primary objective is to assure that we pursue those opportunities which best enhance our shareholders' value."
But union officials had little doubt that this was a euphemism for a sellout, and were quick to take credit for Crown's troubles -- on the face of it for partially good reason.
While poor refining margins have taken a heavy toll on all domestic refiners, there's little doubt the labor dispute has cost Crown dearly. Since locking out unionized hourly workers during contract negotiations in February 1996 at its 100,000 b/d Pasadena refinery, near Houston, Crown has become the target of a union-led boycott that succeeded in slightly trimming its 1998 gasoline retail sale volume, despite the addition of seven stores and higher U.S. gasoline demand.
At least partly because of the dispute, Crown has been forced to battle on several legal fronts. Ironically, Rosenberg -- the grandson of former oil tycoon and human rights standard-bearer Louis Blaustein -- and his company have become the target of a vocal civil rights campaign and lawsuits by employees alleging race- and gender-based discrimination.
Environmentalists and local residents have complained of excess toxic releases, and more recently Crown has been the target of shareholder charges alleging mismanagement by Rosenberg and two of his sons, one of whom resigned last year.
While most independent refiners are running comparatively low on cash, Crown's credit crunch has forced it in recent months to try renegotiating some of its debt -- with little if any success.
Rosenberg's troubles even seem to have spilled over to his family. Last year, Rosenberg's cousins renounced their stake in Crown, leaving the families of Rosenberg and his sisters as majority owners through a separate company, Gateway Gathering & Marketing.
An early hint of Crown's plans to sell came when Gateway recently hired an investment banker, not an oil man, as one of its key officers, union sources said.
Given the apparent magnitude of Crown's troubles, the talk of exploring all "options" sounds a bit like code for selling, or at least taking on a majority partner.
That leaves open the question of who would want to buy it. In this case, few of the usual suspects -- Tosco Corp., Valero Energy Corp., Ultramar Diamond Shamrock -- seem likely candidates as those erstwhile avid shoppers seem to be tightening their belts.
Chances that a producing country would be interested may be stronger. Norway's Statoil, which revived a long-term supply and contract-processing deal with Crown last October, was at one point said to be interested. But Statoil, whose previous refining investments haven't done too well, has since run into a financial crunch of its own.
Citgo, which is seeking to trade its 153,000 b/d Lemont, Ill., plant for one on the Gulf Coast, is another candidate. But Crown's plants run on light oil, rather than the heavier grades that Venezuela is seeking to place. Kuwait also has been rumored to seek refining outlets in the United States.
And in any case, whoever buys Crown's assets will still be left with the thorny task of solving the Pasadena labor dispute.
Copyright The Oil Daily 1999