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Crown Central Petroleum: Second Insider Takeover Bid Opposed

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7 August, 2005ICEM News release No. 98/2000

Crown Shareholders for Fair Value and the US trade union federation AFL-CIO have announced their opposition to the second insider takeover bid in less than a year for Crown Central Petroleum.

The second bid, like the first, is from Rosemore, a private company owned by the family of Crown Central CEO Henry Rosenberg. Shareholders not affiliated with Rosemore rejected the first takeover bid by a 10 to 1 margin this August.

In August, Crown Shareholders for Fair Value argued that the Rosemore bid is less than the book value of the company, less than the liquidation value and a fraction of what the stock was worth two years ago. At that time, a study by the investment banking adviser to Crown Shareholders for Fair Value found that precedent transactions suggest Crown's refineries could be worth US$15.60 to $23.70 per share and that Crown's retail gas stations could be worth another $14.79 to $16.48 share.

The second insider takeover bid of $10.50 per share came just two days after Crown Central replaced four long-time outside directors with candidates who have close ties to Rosemore and Crown, according to a statement issued in Washington yesterday by Crown Shareholders for Fair Value and the AFL-CIO.

Crown Central's Board of Directors now has only three outside directors, less than half the Board, the statement points out. "How an insider-dominated Board of Directors can properly evaluate the fairness of the proposed transaction is anybody's guess," said Richard Trumka, Secretary-Treasurer of the AFL-CIO.

Crown Shareholders for Fair Value is made up of individual shareholders of Crown Central, the AFL-CIO, and PACE International Union. The AFL-CIO's Office of Investment provides research and support for collectively bargained pension funds. PACE is the collective bargaining representative of Crown Central Petroleum refinery employee-shareholders. At the global level, PACE is affiliated to the 20-million-strong International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM).

Crown Shareholders for Fair Value is not soliciting proxies and no proxies will be accepted.