Maritime privatisation unlikely to top $100m
13 April 2007
A minority of minority shareholders are
demanding substantially more than the whopping $2,990 per share Tom
Crowley is offering in his take-private bid for US-flag tug
operator, shipowner and salvor Crowley Maritime Corp.
Some of them
may get a higher price by exercising appraisal rights under a
court-approved buyout agreement.
looks likely to have kept the cost of acquiring 100% control of his
company to the neighbourhood of $100m.
A number of
dissident shareholders have committed to accepting the Crowley offer
as part of a legal settlement. Among these is California-based
mutual-fund firm Franklin Resources. A Franklin fund is the largest
outside shareholder and lead plaintiff in the Delaware lawsuit
The cost of
buying out all minority shareholders is pegged at $93.5m in recent
financial filings by Crowley, based on 31,289 shares not
beneficially owned by Crowley before the buyout bid was announced.
shareholders who have not signed onto the $2,990 offer through the
legal settlement may hold out for substantially more through
exercising appraisal rights for their shares.
ball-parks the potential additional cost from holdouts at around
$5m. Litigation and other expenses from the protracted dispute might
come in at between $2m and $5m.
Crowley announced that the company, the chairman, chief executive
and controlling shareholder had set up a special-purpose company and
was making the buyout offer to end three years of shareholder
strife. A group of minority shareholders including Franklin have
complained of company policies allegedly designed to entrench the
principal shareholder in control of Crowley at their expense.
rarely trade at all and it is very unlikely that anybody has ever
bought a share of the company for as much as the $2,990 now on
investor Leonard Rosenthal is protesting the settlement and claims
it "significantly undervalues the shares", which are worth between
$4,851 and $5,826 based on what he thinks is the most appropriate
way of valuing the illiquid share.
professor Rosenthal, a small shareholder who describes himself as an
expert in valuing corporate stock, wants the Delaware court to stop
the proposed settlement.
Crowley-hired bankers who arrived at the price proposal did not
follow what Rosenthal believes is "the most reliable methodology for
a thinly traded stock in a cyclical industry", namely the ratio of
current price to book value for a comparable group of companies.
Rosenthal's objections are reasonable," New York investment banker
Gary Lutin told TradeWinds.
"But so too are
the views of other shareholders who are tired of fighting with
Crowley and just want to get out with their money."
Lutin has run
shareholder fora for dissident investors in companies including
Amazon.com and Crowley.