The man who wants to take over Baltimore-based Crown Central Petroleum Corp. doesn't sugarcoat his views.
Back in the mid-1980s, in the middle of negotiations with his creditors that would lead to the bankruptcy filing of his company Apex Oil, P.A. (Tony) Novelly jumped up, according to various accounts, and made an obscene hand gesture at his bankers, called them stupid and walked out.
In a letter earlier this week to the board of directors of Crown Central--a money-losing oil refining and marketing company--the secretive, self-made business tycoon from St. Louis also was blunt.
"To state the obvious, the Novelly Group is not satisfied with its investment in Crown, nor do I believe you are satisfied with the performance of Crown's stock," said Novelly who, with his associates, owns 10.7 percent of Crown, making his group the largest single stakeholder outside of the family of Crown chief executive Henry Rosenberg.
"The value of our investment in Crown common stock has decreased from a high in excess of $40 per share to its current value of $5.375," noted Novelly, whose holdings include the now-reorganized Apex Oil Co. and high-priced real estate. Novelly noted that Crown has reported a profit only twice (in 1990 and 1997) since his original investment in the early '80s and has averaged a net loss of $12 million a year over the past nine years.
Novelly's solution also is straightforward: to merge Apex and Crown and to install himself as chairman, chief executive and president of Crown. The merger, he said, would allow the companies to benefit from economies of scale and would allow Apex to replace $125 million of Crown's long-term debt with debt on more favorable terms.
Perhaps typical of a man who has been described as direct in his dealings, the 56-year-old Novelly sidestepped Crown's financial adviser, Credit Suisse First Boston, and took his case directly to the board, saying attempts to work with Credit Suisse "have been frustrated by delays and apparent refusals to meet."
But Novelly will need more than indignation to win Crown. Rosenberg and his family control 49 percent of Crown, including most of the Class A stock that controls six of Crown's eight board seats.
But such odds haven't kept Novelly down before. Press accounts of his career, despite his distaste for revealing anything about himself to the media, describe a risk-taking, energetic businessman who built an oil company empire ranked as the third-largest privately held company in the nation before it succumbed to bankruptcy in 1987.
That company was an earlier incarnation of Apex. "He's a self-made guy twice," said Dennis A. Ferrazzano of the Chicago law firm Barack, Ferrazzano, Kirschbaum & Perlman.
Novelly sought out Ferrazzano in 1983, seeking representation in dealings with creditors, and the two became friends despite the fact that Novelly has "a well-known disdain for lawyers," said Ferrazzano, who describes the oil trader as "a man of integrity--very private but intensely loyal."
Apex Oil was started in the mid-1930s by Charles Mintz, whose son-in-law Samuel Goldstein hired Novelly, a former auditor with Shell Oil Co., in 1968.
In 1979 Novelly and Goldstein restructured Apex as a partnership, and by 1980 the company had revenue of $6.25 billion. In 1981 Apex acquired Clark Oil & Refining Corp. of Milwaukee for $523 million, using a bank line of credit of more than $700 million for the purchase and working capital.
That purchase would turn out to be Apex's undoing. Oil prices began to fall soon after, and Apex, with its holdings of a commodity that was losing value, struggled with losses and obligations to creditors, filing for bankruptcy court protection on Christmas Eve, 1987.
Apex emerged from bankruptcy protection in 1990, after Novelly and associates had acquired some of the choicest pieces from the company's estate. Although there were allegations of self-dealing, none of them were sustained, and unsecured creditors were able to walk away with 64 to 86 cents on the dollar. And, in the wake of the bankruptcy, Apex not only endured, it grew.
Despite the tensions of the bankruptcy, Novelly was "unbitter, unbroken and unbowed," Ferrazzano said.
No longer its former size, Apex is still substantial--one of the most active oil trading firms in the United States, by some accounts, with revenue estimated at about $1.5 billion. In contrast, Crown had revenue of $1.2 billion last year.
Novelly's other business interests include substantial real estate holdings in the St. Louis area. He also once owned the Copper Mountain ski resort in Colorado, which he bought, according to a 1988 Wall Street Journal article, after seeing it from a car window. In the article, one of few instances in which Novelly has talked to the media, he said that "it's something you want if you're a successful businessman--to say you own your own mountain."
In 1996, however, Novelly sold the property that he bought for $24 million for more than $80 million. The resort was sold to Intrawest, in which Novelly is a large shareholder and a board member.
Novelly is a generous man, most of whose giving has been done privately, according to his friend Ferrazzano. One of his most public gifts was his 1998 donation of 20 acres and his 10,000-square-foot, 13-room home to Christian Brothers College High School, his alma mater.
Noting Novelly's history, Ferrazzano said, "He's not a guy that you could ever hold down."
Now Novelly faces a new challenge in his attempt to take over the underperforming Crown Central, whose problems extend beyond the generally miserable condition of the refining industry. Crown also is beset with labor troubles and a nationwide boycott of its products initiated by the union in 1997 after workers were locked out of a Crown refinery in February 1996.
Novelly's bid, which is contingent on "the satisfactory resolution of the boycott against Crown and its subsidiaries by the Paper Allied-Industrial, Chemical and Energy Workers Union" won a quick hurrah from the union. "A change in Crown management and ownership and settling labor and civil rights problems represent the only way to restore Crown to profitability and ensure a fair return to shareholders," said the union's Joe Drexler.
Staff researcher Richard Drezen contributed to this report.
CAPTION: Crown, which operates two refineries in Texas, has turned an annual profit twice in the past decade.