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In March 2007, the controlling shareholder of Crowley Maritime offered $2,990 per share to buy out public investors, a price equal to 258% of the last traded price of shares when the Forum started in April 2004.

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Forum Report: Crowley Announcement of Stock Sale to ESOP

(June 20, 2006)


Sent: Tuesday, June 20, 2006 12:03 PM
Subject: Crowley announcement of stock sale to ESOP

Crowley Maritime reported in an SEC Form 8-K filed this morning that the company recently sold an additional 2,000 shares of its common stock to the Crowley Maritime Corporation Employee Stock Ownership Plan (“ESOP”) at a price of $1,913 per share.  According to the statement, the full text of which is copied below, that price was determined to be the "fair market value" of the stock based on an unidentified "independent appraisal."
The $1,913 price is costing the ESOP approximately 6% more than the $1,805 reported by "Pink Sheets" as the stock's most recent trading price.
It is not clear how the transaction benefits existing shareholders.  By arranging to have the company sell 2,000 shares to the ESOP rather than buying the ESOP's shares in the open market, the number of outstanding common shares was increased by 2.4%.  The dilutive effect on common stock interest in the company's equity, taking into account the equity interests of other classes of stock, was to reduce the share of ownership by 1.3%.
The transaction also dilutes the book value of equity per share of common stock.  The company is selling the stock for $402.34 per share less than the $2,315.34 per share book value (based on the $361.5 million stockholders' equity reported by the company in its most recent SEC Form 10-Q for the quarter ended March 31, 2006), or roughly a 17% discount.  The net impact is to reduce the book value of equity by $5.09 per share of common stock, about 0.22%.
Please let me know if you have any questions or comments.
             - GL
Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212/605-0335
Fax: 212/605-0325

From SEC Form 8-K filed June 20, 2006 by Crowley Maritime Corporation:
Item 3.02. Unregistered Sales of Equity Securities.
On June 15, 2006, pursuant to a Stock Purchase Agreement dated as of such date, Crowley Maritime Corporation (the “Company”) sold 2,000 shares of its common stock to the Crowley Maritime Corporation Employee Stock Ownership Plan, (the “ESOP”). The ESOP paid $1,913 per share, the fair market value of the stock as of June 15, 2006 as determined by an independent appraisal based on a non-marketable minority interest, for an aggregate purchase price of $3,826,000. The ESOP borrowed from the Corporation an amount equal to the purchase price (the “ESOP Loan”). The ESOP Loan, bearing interest at a fixed rate of 5.0% per annum, will be repaid over a ten-year term from the Company’s plan contributions. After giving effect to the transaction, the ESOP owned 3,000 shares of the Company’s 90,744 outstanding shares of common stock.
The shares of common stock were sold pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended, because the shares sold were offered only to the ESOP.




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