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Bill Koch Can't Block Firm’s Oxbow Sale Demand, Judge Says

Updated on
  • Billionaire violated agreement by attemping to derail sale
  • Fund seeking to cash out $150 million stake in energy firm

A judge ruled that billionaire William Koch can’t block Crestview Partners LP from forcing the sale of Koch’s Oxbow Carbon LLC so the private equity firm can cash out its $150 million investment in the energy company.

New York-based Crestview didn’t improperly conspire with Oxbow executives to oust Koch as chief executive officer to force a quick sale in violation of an agreement, Delaware Chancery Court Travis Laster said Monday.

The ruling is the latest turn in a two-year corporate wrestling match over Oxbow, one of the world’s biggest producers of petroleum coke used in aluminum production and one of the U.S.’s largest privately held companies. Koch is the brother of conservative billionaire political donors David Koch and Charles Koch. He is worth an estimated $4 billion, according to the Bloomberg Billionaires Index.

“Oxbow Carbon and its founder and CEO Bill Koch have always been committed to representing the best interests of all its members,” Brad Goldstein, the billionaire’s spokesman, said in an emailed statement. “We are currently reviewing the decision and will evaluate our options as part of that review.”

Jeffrey Taufield, a spokesman for Crestview Partners, praised Laster for doing a “ thorough examination of the underlying facts and applicable law’’ before ruling in the firm’s favor.

Personal Jet

Laster found Koch’s conspiracy allegations didn’t overcome his obligations to sell Oxbow if Crestview properly requested it. The firm’s officials were “not guilty of unclean hands such that they should be deprived of their right to an exit sale,” the judge said.

Koch also violated the agreement by acknowledging in his trial testimony that he set out to “obstruct, derail and delay” the sale and filed suit against Crestview to scare off potential buyers, Laster ruled.

During the trial, Crestview targeted what it says is Koch’s mismanagement of Oxbow, pointing to his demands the company pick up the tab for his personal Dassault Falcon jet and his children’s private-school tuition.

Koch, who reimbursed the company $5.3 million over the jet in 2015, said the payment wasn’t an acknowledgment of wrongdoing and denies charging the company for his children’s fees to attend Oxbridge Academy in West Palm Beach, Florida.

The billionaire also alleged Eric Johnson, Oxbow’s former president, and Christina Wing O’Donnell, a former Oxbow board member who oversaw his family’s investments, conspired with Crestview officials to force Koch out as CEO, replace him with Johnson, and then ram through a sale of a majority stake in the firm.

Koch pointed to a January 2016 email in which O’Donnell tells Johnson “Let’s take his company from him quickly, not a day of relief, put him through the hell he put us through.’’ The investment manager added the pair should “take his plane, his job, and when it’s over let’s drink his wine.”

Koch is a famed wine collector who convinced a New York jury in 2013 to award him $12 million in damages from a dealer who sold the billionaire 24 bottles of counterfeit Bordeaux.

Koch fired Johnson and O’Donnell in 2016 after learning about their surreptitious campaign to oust him. He settled his claims against the former executives in July during trial. Terms of those settlements weren’t announced.

Witnesses noted during the trial that Moelis & Co., a New York-based investment bank, estimated Oxbow’s fair-market value at $2.65 billion for purposes of the sale. Laster said he may appoint a receiver to oversee the sale process.

The case is In Re Oxbow Carbon LLC Unitholder Litigation, CA12447, Delaware Chancery Court (Wilmington).

(Updates with Koch’s comment.)
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