'Dissidents' hold off on Crowley
Bob Rust Stamford
23 June 2006
(c) 2006 TradeWinds
Crowley workers are rejecting the
company's offer to buy back shares.
Crowley Maritime Corp says the fair
market value of its unlisted stock has hit $1,913 per share. But
even this price is too low to satisfy a group of dissident
shareholders of Crowley, which is by some measures the largest US
domestic or "Jones Act" shipowner.
New York investment banker Gary
Lutin, spokesman for the Crowley shareholder forum, tells TradeWinds
the company would now have to pay around $2,500 per share to buy out
its dissidents. They might have accepted $1,600 per share a year
back, says Lutin.
The dissidents do not pose a threat
to control of the company, in which Oakland-based president, chief
executive officer and chairman Tom Crowley Jr holds a majority of
shares and votes.
However, they have been pursuing
litigation against management over what they consider the neglect of
their rights as shareholders. The $1,913 per share mentioned by
Crowley was determined by independent assessors in connection with a
fresh issue of unregistered shares for purchase by an employee stock
ownership plan (ESOP).
The transaction disclosed this week
in a filing with the US Securities and Exchange Commission (SEC) is
dated 15 June.
The valuation is "based on a
non-marketable minority interest" in common shares, says Crowley in
the filing. Crowley dissidents are said to regard this as a damning
admission of their own contention that management policies have
contributed to illiquidity and depressed the value of their shares.
The new price represents a 36%
increase over last summer's price of $1,402. The Pink Sheets listing
of over-the-counter traded stocks lists the annual low and high of
the rare share at $1,800 and $1,805, respectively.
Crowley set up its ESOP last August
with an initial issuance of 1,000 shares. This year, the employee
scheme bought 2,000 more shares at the new price for some $3.8m. The
money to purchase the shares was borrowed from Crowley for 10 years
at a fixed 5% per year. Shares offered only to an ESOP need not be
registered with the SEC. Plan provisions mean many ESOP shares could
revert to the company.
According to earlier filings, the
ESOP releases shares to employees as principal on the company loan
is paid. Shares vest with eligible employees after they have been
employed for five years. The employees then have a put option,
allowing them to sell shares to the company at fair market value as
determined by the ESOP.
Crowley says the ESOP now owns
3,000 of Crowley's 90,744 outstanding shares of common stock. The
dissident group was thought to control around 10% of voting power in
the lightly traded Crowley share before the new ESOP share issue.
Some members of the group have been
involved in Delaware litigation with Crowley over allegations that
management neglected its fiduciary duty towards minority
shareholders through policies designed to entrench and perpetuate
the principal shareholder's control.
Crowley is legally a public company
in the sense that it is subject to SEC disclosure rules but it notes
in its financial filings and on its website that it is predominantly
owned by Crowley family members and employees and is not publicly