- Billionaire Oxbow Carbon CEO opposes fund on exit sale
- Crestview wants quick sale to recoup investment, suit claims
Lawyers for billionaire William Koch will urge a judge to fast-track a lawsuit accusing Crestview Partners LP of seeking to oust him as head of Oxbow Carbon & Minerals Holdings Inc. so the investment fund can force a quick sale of the energy company.
Koch, brother of conservative billionaire political donors David Koch and Charles Koch, wants Delaware Chancery Court Judge Travis Laster to speed up the handling of his claims that Crestview improperly tried to push him out as Oxbow’s CEO to clear the way for a sale. A hearing in the case is scheduled for Thursday in Wilmington.
The fight over Oxbow’s future comes as commodity prices are struggling to pull out of a historic rout. The Bloomberg Commodity Index is down 43 percent in the last five years, with energy sources including crude oil and natural gas suffering from oversupply and sluggish demand.
West Palm Beach, Florida-based Oxbow is one of the world’s biggest producers of petroleum coke, which is used in aluminum production. The carbon-rich residue from oil refining can also be burned as a substitute for coal by some electricity producers.
Crestview officials, some of whom serve on Oxbow’s board, launched “an improper and unjustified campaign of personal attacks against” Koch in hopes of forcing him to accede to a quick sale, according to the suit, unsealed June 17. Load Line Capital LLC also is backing the so-called exit-sale demand and has been named as a defendant in the suit.
“Bill Koch’s complaint is baseless and represents the latest attempt to deprive Crestview and Load Line of their contractual rights to complete an exit sale of Oxbow Carbon,” Jeffrey Taufield, an outside spokesman for the fund, said in an e-mailed statement. The fund’s lawyers said in their own legal filings that Koch was improperly seeking to block Oxbow’s exit sale and protect his own interests.
Crestview, which bought a minority stake in Oxbow in 2007, was founded by former Goldman Sachs Group Inc. investment bankers Tom Murphy and Barry Volpert in 2004. The fund invoked its rights under the investment agreement last year to have Koch cash out its position in Oxbow. When the billionaire refused in January, the fund sought to force an exit sale, which would prompt Oxbow to be put on the market, according to Koch’s suit.
When Koch opposed the quick sale, Crestview officials “engaged in bad faith conduct” in hopes of hastening the fund’s exit from Oxbow, according to the filings. They sought to develop a “mole” among Oxbow’s directors who provided fund managers with “confidential information about Mr. Koch and his business and personal affairs,” Koch’s attorneys said in the filings
Volpert and fellow Crestview colleague and Oxbow director Robert Hurst led an effort to “hijack control of the sale process” by leaking confidential information to potential buyers, Koch’s lawyers said. Goldman Sachs is serving as Oxbow’s financial adviser in the sales process, according to court filings.
“Mr. Koch has consistently opposed Crestview’s efforts to short-circuit the broad-based sales process being run by the board with the assistance of Goldman Sachs and Crestview’s efforts to sell the company at an inadequate price,” his lawyers said in the filings.
The fund’s efforts violated the investment agreement and amount to improper interference with that contract, Koch contends. He’s asking Laster to find Crestview has forfeited its rights to force an exit sale because of its actions.
Crestview contends in its counterclaims that there is a bona-fide bidder interested in buying Oxbow under the investment agreement, but Koch is improperly creating obstacles to the sale.
Koch is intentionally refusing to “use all reasonable efforts” to push ahead with the sale and rebuffed Crestview’s efforts to take the dispute to binding arbitration, the fund’s lawyers said.
The case is Oxbow Carbon & Minerals Holdings Inc. v. Crestview-Oxbow Acquisitions LLC, CA 12447, Delaware Chancery Court (Wilmington).