Tosco Corp., which is facing a fight for control of its board, has sent shareholders a strongly worded letter charging that dissident Kenneth M. Good wants to raid Tosco's assets to cover his personal cash needs.
"A real estate operator named Kenneth M. Good, who styles himself a 'crapshooter' and a 'gambler,' has started a proxy contest to try to get five seats on Tosco's board of directors," Tosco management said in a letter urging stock owners to side with incumbent management.
"We have no doubt that Good will be good for Good, but will he be good for you?" the letter exhorts.
Tosco is the 40 percent owner of the Colony Oil Shale Project, a synthetic fuels project with a $1.1 billion government loan guarantee. In addition to fending off the challenge from Good, the corporation also has been threatened with the loss of the loan guarantee unless it produces satisfactory answers to questions about reported cost overruns of $2 billion and about the security backing the loan.
Tosco management noted that filings with the Securities and Exchange Commission indicate that "Good and his associates have been subjected to some $15 million in margin calls on stock he bought on borrowed money." The group also owes $10 million more to brokerage firms and still more to banks, the letter said.
"Good has not shown any source of income to sustain the cost of maintaining his position other than the continuing sale of his real estate or the sale of stock," according to the letter signed by Tosco's chairman, Isadore M. Scott, and president and chief executive officer, Morton M. Winston.
"We believe that Good . . . is trying to use Tosco's assets--instead of his own--to meet his continuing cash needs. To that end, he has advanced a scheme to abandon and sell Tosco's Colony Project at this crucial stage of its progress and development," they wrote.
Good, who is the largest shareholder of Tosco Corp., has filed suit accusing the company and its board of directors with violations of the antifraud provisions of federal securities laws. According to the suit, they failed to disclose adequate information about cost overruns and other difficulties confronting the company's oil shale project.
Good has been seeking control of the company since last summer.