UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
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[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-12
CROWN CENTRAL PETROLEUM CORPORATION
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(Name of Registrant as Specified in its Charter)
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[BNP PARIBAS LETTERHEAD]
July 12, 2000
Mr. Tony Novelly
Apex Oil Company, Inc.
8182 Maryland Avenue
St. Louis, MO 63105
Dear Tony,
We are pleased to inform you that subject to credit committee approval
and review of the final structure of the acquisition/merger of Crown
Central Petroleum Corporation (Crown) with Apex Oil Company, Inc.
(Apex), BNP Paribas will issue an irrevocable letter of credit on behalf
of Apex. The amount of the letter of credit will be US$112.50 million,
based on approximately 9 million shares of Crown common stock which will
benefit from the letter of credit at a price of $12.50 per share. The
beneficiaries of this letter of credit will be the shareholders of
record of Crown common stock (excluding any shares of Crown stock owned
by Apex or related parties) as of the date the acquisition/merger of
Crown and Apex is completed. This letter of credit will have a maturity
date of exactly one year after the acquisition/merger of Crown and Apex
is completed.
This letter of credit will guarantee payment at maturity date to
eligible shareholders, the difference between $12.50 and the highest
average price of Crown common stock over any twenty (20) consecutive day
trading period during the term of this letter of credit. However, if
Crown's common stock price exceeds $12.50 or more for twenty (20)
consecutive trading days at any time during the duration of this letter
of credit, this letter of credit will terminate with no payment being
made to any of the Crown shareholders under the terms and conditions of
this credit.
Sincerely,
/s/ - - Marcie Weiss
Marcie Weiss
Director
[FOOTHILL CAPITAL CORPORATION LETTERHEAD]
July 12, 2000
Apex Oil Company, Inc.
8182 Maryland Ave.
St. Louis, MO 63105-3721
Attn.: Mr. John Hank, Chief Financial Officer
Re: Loan Proposal
Dear John:
In accordance with our recent discussions, Foothill Capital Corporation
("Lender") is pleased to issue this proposal (the "Proposal") to arrange
and agent a financing (the "Credit Facility") to a to-be-formed
subsidiary ("Borrower") of Apex Oil Company ("Apex) which would be
formed by virtue of the purchase of substantially all of the common
stock of Crown Central Corporation ("Crown") by Apex, or by virtue of
the merger between Crown and Apex. Subject to the satisfactory
completion of each of the conditions set forth herein, the Credit
Facility shall be structured as follows:
1. LOAN STRUCTURE:
a. MAXIMUM CREDIT LINE: $250,000,000
b. REVOLVING LOAN: Lender shall provide revolving
advances in an aggregate amount up to the lesser
of (i) amount equal to the sum of (A) eighty-five
percent (85%) of eligible accounts receivable of
Borrower, net of customary reserves and taxes;
PLUS (B) eighty percent (80%) of eligible crude
oil, gasoline and refined products inventory of
Borrower, net of customary reserves and taxes;
PLUS (C) sixty percent (60%) of eligible
convenient store inventory of Borrower, net of
customary reserves and taxes; less (D) the amount
of any open L/Cs; and (ii) $125,000,000 ("Maximum
Revolving Credit Line") LESS any amounts
outstanding under the Letter of Credit Subline.
c. BRIDGE LOAN: Lender would provide a Bridge Loan
equal to the lesser of (i) $125,000,000, or
(ii) an amount to be determined based upon the
orderly liquidation value and business value of
the Borrower's gas station network, terminals and
refinery, as determined by a third party
appraiser. Principal payments of the Bridge Loan
would be determined at a later date.
d. LETTER OF CREDIT SUBLINE:
AMOUNT: Lender would provide of Letters of Credit
("L/Cs") on behalf of Borrower in an amount to be
determined (based upon Borrower's anticipated
requirements).
RESERVES AGAINST AVAILABILITY: L/Cs and/or
guarantees would be reserved on a one hundred
percent (100%) basis against loan availability.
L/C FEE: A fee of two percent (2.00%) per annum
(exclusive of all bank issuance costs, fees, and
charges) of the average outstanding L/Cs would be
charged monthly, in arrears. Grid pricing would
apply and would be determined during the due
diligence process.
2. PURPOSE:
Proceeds of the Credit Facility would be used in
conjunction with the acquisition or merger of Crown by
Apex (i) to refinance Crown's secured indebtedness,
owed to Congress Financial Corporation; (ii) to
refinance the Borrower's $125,000,000 of outstanding
bonds; and (iii) for general corporate purposes
including the financing of working capital, capital
expenditures and corporate expenses.
3. INTEREST RATE:
The rate of interest charged on the Revolving Loan
shall be, at Borrower's option, three percent (3.00%)
per annum above the Eurodollar rate or one half of one
percent (0.50%) per annum above the Reference Rate.
Grid pricing would apply and would be determined during
the due diligence process.
The Reference Rate is publicly announced as being charged from time
to time by Wells Fargo Bank N.A. ("Wells Fargo") as its "Prime
Rate". The Eurodollar rate will be calculated based on the average
of rates of interest per annum at which Wells Fargo is offered
deposits of U.S. dollars in the London interbank market ("LIBOR")
adjusted by the reserve percentage prescribed by governmental
authorities as determined by Lenders. Interest shall be calculated
on the basis of a three hundred sixty (360) day year and actual
days elapsed, and shall be payable monthly in arrears. All
collections and other proceeds from the collateral shall be
directed to a lock box and shall be subject to a one business day
clearance charge for accrued interest calculations only.
Upon the occurrence of an event of default, the rate of interest on
the Revolving Loan and the L/C Fee shall equal a rate equal to two
percent (2.00%) above the rate otherwise applicable thereto.
The rate of interest and fees charged on the Bridge Loan shall be
determined at a later date and is subject to syndication.
4. FACILITY/MAINTENANCE FEES:
a. FACILITY FEE: For providing the facility set
forth herein, a one-time fee of one and one-half
percent (1.5%) of the Revolving Credit Line shall
be earned and payable in full at the closing. In
addition, a one-time fee in an amount to-be-
determined, based on the Bridge Loan, shall be
earned and payable in full at the closing.
b. LOAN SERVICING FEE: A fee of $12,000 would be
payable monthly in arrears plus, within six months
of loan closing. Borrower would be required to
pay a one-time set-up fee of $3,000 (plus out-of-
pocket expenses)to facilitate the establishment of
electronic collateral reporting, satisfactory to
Lender. In the event Borrower is unable to
establish satisfactory electronic reporting, the
fee would be increased to $15,000 per month.
c. UNUSED LINE FEE: A fee of three-eighths of one
percent (0.375%) per annum payable monthly shall
be charged on the difference between the average
daily usage under the Credit Facility and the
Maximum Revolving Credit Line.
d. SYNDICATION FEE: A fee of one-quarter of one
percent (0.25%) of the Maximum Credit Line would
be earned and payable at the time of the initial
funding.
5. LOAN MATURITY AND PREPAYMENT:
The Revolving Loan would mature in four (4) years
("Revolving Loan Maturity"). Termination of the
Revolving Loan, prior to Revolving Loan Maturity, would
result in a prepayment fee equal to three percent (3%),
one and one-half percent (1.5%), one percent (1%) and
one-half of one percent (0.5%) of the Maximum Revolving
Credit Line if terminated during years one, two, three
and four, respectively. No prepayment fees shall apply
if the Revolving Loan is refinanced with Wells Fargo
Bank. The Bridge Loan would mature fourteen (14)
months after the closing of the Credit Facility
("Bridge Loan Maturity"). Termination of the Bridge
Loan, prior to Bridge Loan Maturity, would not result
in a prepayment fee.
6. LOAN COVENANTS:
Borrower would be subject to minimum tangible net worth
and minimum EBITDA covenants. The covenants would be
based on a discount of Borrower's projected operating
performance.
7. COLLATERAL:
As collateral for all its loans and advances Lender
would have a first position security interest in ALL of
Borrower's assets both tangible and intangible,
including, but not limited to, accounts receivable,
inventory, general intangibles (including trademarks
and tradenames), chattel paper, machinery and
equipment, and real estate, including the gas station
network, terminals and refinery.
8. CONDITIONS PRECEDENT:
The following are some, but obviously not all, of the conditions
precedent to Lender's obligation to extend credit and advance funds
to Borrower:
a. Borrower shall be a corporation in good standing in the
state of its incorporation and qualified to do business
in other states where it has collateral.
b. Completion of a field survey by Lender's examiners,
which results are to be acceptable to Lender.
c. Lender's senior credit committee's final review and
approval.
d. Officers of Borrower shall have executed and delivered
such documents, instruments, security agreements,
insurance, financing statements, guarantees,
verifications, non-offset letters, tax lien and
litigation searches, good standing certificates, copies
of building leases, landlord's waivers, trust deeds or
mortgages, tri-party agreements, subordination
agreements, opinions of counsel and done such other
acts as Lender may request in order to obtain Lender's
legal approval to effect the completion of the
financing arrangements herein contemplated. All of the
foregoing must be in a form satisfactory to Lender and
Lender's counsel, all loans and advances shall be made
pursuant to, and subject to, the terms of financing
documents executed at the closing.
e. Lender's receipt of reference checks regarding
Borrower's principals, the results of which are
satisfactory to Lender.
f. Lender shall have received appraisals for inventory,
gas stations, terminals and real estate, and Phase I
appraisals for all real estate, the results of which
are to be acceptable to Lender. In addition, Lender
shall have received a business valuation of Borrower's
gas station network.
g. Lender shall have recorded financing statements and
received UCC searches of record.
h. No material adverse change in the assets, business,
operations, profits or prospects of Borrower shall have
occurred since the date of the Proposal.
i. Borrower shall, at loan closing, have a level of unused
loan availability under the facility herein proposed
reasonably satisfactory to Lender, after reserving for
an amount necessary for Borrower to meet its
anticipated cash requirements.
j. Apex and/or its principals shall have purchased all
outstanding stock of Crown Central Corporation or
successfully merged with Crown Central Corporation on
terms reasonably acceptable to Lender.
k. Lender shall receive a limited guarantee from Apex Oil
Company.
l. Lender shall have successfully syndicated this Credit
Facility prior to the funding and reserves the right to
amend terms and conditions herein, if necessary to
successfully syndicated this Credit Facility.
m. At closing, Borrower shall have received an equity
investment from Apex or its shareholders in an amount
to be determined.
9. COMPLETE AGREEMENT; NO ORAL MODIFICATIONS:
The Proposal embodies the entire agreement between the
parties hereto with respect to the subject matter
hereof and supersedes all prior proposals,
negotiations, or agreements whether written or oral,
relating to the subject matter hereof including any
letter of intent. This letter may not be modified,
amended, supplemented, or otherwise changed, except by
a document in writing signed by the parties hereto.
10. CLOSING DATE:
If the transaction contemplated by the Proposal is not
consummated on or before the sixtieth (60th) day from
the execution thereof, then the terms and conditions
set forth herein shall thereafter expire, without
further notice or act of any kind by Lender or any
other party.
11. PERIODIC LOAN MAINTENANCE CHARGES:
Borrower shall be periodically charged for due
diligence and loan maintenance costs consisting of
financial analysis ($750 per man day plus out-of-pocket
expenses) and appraisal (actual third-party fees plus
out-of-pocket expenses).
12. LOAN ORIGINATION COSTS:
Loan origination costs including, but not limited to,
financial analysis fees ($750 per man day plus out-of-
pocket expenses), attorneys' fees, search fees,
appraisals, documentation and filing fees, shall be
paid by Borrower. Such expenses shall be paid to
Lender on demand, together with such advance funds on
account of such expenses as Lender may from time to
time request.
13. DUE DILIGENCE FEE:
In connection with your request for financing, you
understand that it will be necessary for us to make
certain financial, legal and collateral investigations
and determinations. In order for us to commence with
this process, we will require a due diligence fee in
the amount of $200,000 (the "Due Diligence Fee"). Any
unused portion of the Due Diligence Fee shall be fully
credited to the Facility Fee upon closing.
14. INDEMNIFICATION:
Borrower shall pay, indemnify, defend, and hold Lender,
and each of its officers, directors, employees,
counsel, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent
permitted by law) from and against any and all claims,
demands, suits, actions, investigations, proceedings,
and damages, and all reasonable attorneys fees and
disbursements and other reasonable costs and expenses
incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought),
at any time asserted against, imposed upon, or incurred
by any of them in connection with or as a result of or
related to the execution, delivery, enforcement, or
performance, of this proposal letter or the
transactions contemplated herein, and with respect to
any investigation, litigation, or proceeding related to
this commitment letter, (irrespective of whether any
Indemnified Person is a party thereto), or any act,
omission, event or circumstance in any manner related
thereto, unless and to the extent such claims, demands,
suits, actions, investigations, proceedings, damages,
fees, disbursements, costs or expenses are incurred as
a result of the gross negligence, intentional fraud or
willful misconduct of an Indemnified Person. This
provision shall survive the termination of this letter.
15. CONFIDENTIALITY:
The contents of this Proposal are confidential.
Borrower agrees that they will not show, circulate, or
otherwise disclose this letter or its contents to any
other person (other than its officers, employees,
attorneys, agents and advisors, on a confidential
basis, as necessary, in connection with their
evaluation of the terms and conditions set forth
herein, who shall agree to maintain its confidentiality
"Exempt Persons"), except as required by law or as
necessary to facilitate the acquisition or merger of
Crown. If this Proposal is not accepted by the
Borrower, Borrower agrees that it immediately will
return to Lender the original copies of the Proposal,
and any summaries thereof which Borrower or its
advisors may have created. In the event that this
Proposal is not accepted by the Borrower and the terms
contained herein are disclosed to any person other than
Exempt Persons, and the transactions contemplated in
this letter are consummated by Borrower by virtue of a
financing provided by another financial institution,
the Due Diligence Fee would become immediately due and
payable upon the closing of such merger or acquisition
of Crown. If the Proposal is accepted by the Borrower,
you may thereafter disclose the information contained
in the Proposal to the extent necessary to facilitate
the transactions contemplated herein.
If you wish to proceed on the basis outlined above, please execute this
letter in the space provided below and return it to the undersigned no
later than 5:00 p.m., Central Daylight Time, on or before July 31, 2000,
which acceptance must be accompanied by the payment of the Due Diligence
Fee, payable by wire transfer to Foothill Capital Corporation c/o the
Chase Manhattan Bank, New York, NY (ABA 021000021; Account Number: 323-
266193 Re: Apex Oil Due Diligence Fee). If you fail to do so by such
date and time, this letter shall expire automatically. This letter is
being provided to Borrower on a confidential basis and is not for the
benefit of, nor should it be relied upon by, any third party.
Sincerely,
FOOTHILL CAPITAL CORPORATION
/s/ Frank Rant
Frank Rant
Senior Vice President
Acknowledged and accepted this ___ day of July, 2000
APEX OIL CORPORATION
By ________________________________
Title ________________________________