The Baltimore Sun from Baltimore, Maryland • Page 42

Business Page 2c Friday, June 23, 2000 The Sun Oil industry Bankruptcy Go Round claims paid Crown petroleum reports profit for April and May Business Digest In the Region FiIsonartCEO charged with lying or liens on vehicles, were the first paid. Some of those payments came from the $70 million brought in by the sale of the company's assets, such as its warehouse and other real estate, cars, merchandise and equipment. Employees who remained with the company longest have a higher priority than those who left before them. Some employee claims have already been paid or at least par-' tially paid. Many employees received their severance pay when they were let go most before 1996.

And most employees received their 401k benefits within six months of being laid off, as well as bonuses from going-out-of-busi-ness sales. So far, at least $10 million has been paid to the 1,400 employees who filed claims in 39 states, and they will likely get a total of $20 million. Those claims are only a fraction of the entire 10,000 claims. Devan hopes to seek court approval within the next month to Healthcare After string of quarters with earnings losses, company nets $8 million By Kristine Henry 1 SUN STAFF After six quarters In a row of losses, Crown Central Petroleum Corp. netted $8 million in April and May alone, according to documents filed with the Securities and Exchange Commission yesterday.

The filing came as Crown gears up for a meeting where shareholders will likely vote on whether Crown should be acquired by Rosemore a holding company owned by the same family that runs Crown and owns a majority of its shares. A meeting date has not been set. "The earnings information wan yui uut ku pruviue sluckiiuiu- ers with full access to current information," said Crown spokesman J. Steven Wise. "This is information they would not have had until the end of the inimrtpr nnrmn he cairt The pending Rosemore deal has already brought Crown one shareholder lawsuit, which was -subsequently dropped, and failing irn ii i inva rra nnanrro in rnrrimop may have left it more vulnerable to additional lawsuits.

Crown lost $3.6 million in the 1 first three months of the year on revenue of $421.5 million. For the first five months of the year it had a net income of $4.4 million; for the first five months of 1999, Crown lost $16 million. urown, wnose two retmenes cue luvatcu til i cAaa, ucuciitcu i i i 1 i ni i from an improvement in the Gulf Coast crack spread the difference between what oil costs and what the refined product brings in. The spread went from $2.25 a barrel for the first five months of 1999 to $4.79 a barrel for the like period this year. Wise said low gasoline inventories largely drove the increase.

Crown's board accepted a takeover offer from Rosemore in April. But before shareholders could vote on the deal, St. Louis-based Apex Oil Co. which had for months tried to acquire Crown, offered $10 per share. Wise said Crown's independent directors "believe the merger is still in the best interests of shareholders and recommend approving the merger with Rosemore." Nevertheless, he said, Crown's board is still considering the Apex offer.

According to another SEC filing submitted yesterday, representatives of Apex will meet with officials at Credit Suisse First Boston, which has been retained by Crown, on July 14. Crown's chairman, chief executive and president, Henry A. Rosenberg is chairman of Rosemore. His son, Edward Rosenberg, is Rosemore's chief executive. Rosemore owns 11 percent of Crown's Class stock and 49 percent of the Class A stock, which has 10 times the voting power of the Class shares.

Apex holds about 15 percent of Crown's Class A shares and 3.5 percent of the shares. Crown's shares closed up 12.5 cents yesterday at $9.25. New drug insurance program begins for rural elderly More Meriy Bankruptcy trustee to distribute funds from $185 million settlement By Lorraine Mirabella SUN STAFF The bankruptcy trustee for defunct clothing chain Merry-Go-Round Enterprises is preparing to disburse funds from a legal settlement to pay the claims of some former employees and vendors. Deborah Hunt Devan, the court-appointed attorney who handled the chain's liquidation, said she soon will seek court approval to distribute $8 million of the $185 million that accounting giant Ernst Young LLP paid last year to settle a lawsuit against it. The lawsuit, filed by Devan and settled in April 1999, alleged that the accounting firm's bungling led to the chain's downfall.

The next round of disbursements will cover mainly severance, vacation and sick pay for employees. Ernst Young paid the settlement late in the fall. In January, a federal bankruptcy judge approved $71 million in legal fees for Stephen L. Snyder and two lawyers in his Pikesville firm who represented Devan in the suit. Under a previous agreement with the trustee, the attorneys had been entitled to 40 percent of the settlement amount.

Court costs took about $2 million, and income taxes still must be paid, which could amount to some $10 million, Devan said. Creditors, who range from suppliers to former employees, are being paid according to priorities determined by bankruptcy statutes. For instance, secured creditors, such as lenders holding mortgages si i i Ifc'ttiHffMtft IIMwt, distribute the next $8 million to employees, most of that for severance, vacation and sick pay. She estimates that the money would reach the employees by late fall. "The bulk of the 1,400 had valid claims," Devan said.

"Anyone who had a valid claim will get paid the full, allowed amount of the claim." That means, for instance, that an employee might claim to be owed three weeks vacation, but might actually be owed two weeks, according to employment records. In such a case, the employee would get two weeks, she said. Devan said she expects to take another year to completely settle all claims. She and her staff have been in contact with most employees and other creditors and have gotten few questions from them. But "the biggest question is from former stockholders, and the answer is no, there is not enough to make payments to the stockholders," she said.

"They are the lowest priority and there won't be enough funds to pay anything to them." high, and recommended cutting it in half. Just before adjournment, the legislature agreed to preserve the discount but require the subsidy for the prescription plan. The subsidy is in proportion to the dollars received in hospital discount. CareFirst will pay about 80 percent of the $5.4 million, with the rest split between Aetna, U.S. Healthcare and Mid Atlantic Medical Services Inc.

If the program sustains losses beyond the subsidy, CareFirst will absorb them, said Fran Doherty, the lobbyist for the insurer. If the plan generates a surplus, the state keeps the money, she said. Sinclair selling last 6 of its radio stations By Amanda J. Crawford SUN STAFF Settling its litigation with a former top executive and rival Emmis Communications Cockeys-ville-based Sinclair Broadcast Group Inc. said yesterday that it will sell six St.

Louis radio stations to the Indianapolis company for $220 million. The agreement, which allows Sinclair to maintain control of KDNL-TV, Its St. Louis television station, completes the company's move out of the radio business. "We think it is terrific," said Patrick Talamantes, Sinclair's chief financial officer. "It allows us to get the lawsuit behind us and focus on our television operations." The dispute between the companies began in June 1999 when Barry Baker, former head of Sinclair's radio and TV operations, sold to Emmis for an undisclosed sum his options to buy all of Sinclair's St.

Louis broadcast operations. Baker still held those options, granted in his employment contract, when he left Sinclair in February 1999 to become president and chief operating officer of USA Networks Inc. He resigned that position Wednesday. During negotiations between the companies, an appraisal of the St. Louis properties, including the TV station, valued them at $366.5 million, a price Sinclair said was too low.

Sinclair then filed a $40 million lawsuit in Baltimore County Circuit Court against Emmis and Baker, charging that Baker's deal with Emmis was invalid because the terms of the employment contract were too vague. Baker and Emmis responded in March with a $300 million counter-suit against Sinclair for holding up the agreement. "The fact that we were able to retain the St. Louis television station was a win, from our perspective," Talamantes said. He said the company believes that the $220 million price for the radio stations was fair.

"I think it is a fair deal for everybody," said Jeff Smulyan, chairman and chief executive of Emmis. The sale is subject to Federal Communications Commission and Department of Justice approval. Talamantes said Sinclair plans to use the after-tax proceeds of about $175 million to reduce its debt. Sinclair owns or operates 61 TV stations in 40 markets. to The top executive of Texas-based Wilsonart International Inc.

has been indicted for allegedly lying to a federal grand jury in Baltimore that was investigating price-fixing in the $1 billion U.S. laminate market, which includes such products as kitchen and bath counters and office desks. William Reeb, Wilsonart's president and chief executive officer, was indicted in U.S. District Court here Wednesday on four false statement counts. The indictment says Reeb falsely testified to the grand Jury in November 1999 that he had not discussed plans to fix prices or limit competition among manufacturers of high-pressure laminates.

Reeb testified that he never participated in such discussions. The indictment says Reeb had discussed efforts to limit prices and curb competition with company managers from Nevamar, an Odenton company acquired by International Paper Inc. in 1990, and Panolam Industries International of Connecticut. Wilsonart, the largest American manufacturer of high-pressure laminates, said in a statement that the charges are unfounded. Allegheny Energy Inc.

to consider IPO Allegheny Energy Inc. will consider an initial public offering of its power plants once all of its generating capacity has been transferred to an unregulated subsidiary, Chief Financial Officer Michael Morrell said yesterday. As a result of a settlement reached this week in Ohio, he said, all of the Hagerstown-based company's power plants should be under the control of its unregulated generation subsidiary, Allegheny Energy Supply, by the end of the first quarter next year. Once the transfers are done, Morrell said, the company would "take appropriate action" to gain investor recognition of the new unit, adding that a spin-off ts an alternative being considered. Rite Aid aims to cut debt through exchange of stock Rite Aid Corp.

says it will reduce its long-term debt by exchanging shares of common stock for principal on its outstanding 5.25 percent convertible subordinated notes due 2002. Bob Miller, Rite Aid's chairman and chief executive officer, said the exchange of more than 17 million shares of stock for $177.79 million of the principal on the debt will help the company strengthen its balance sheet and financial performance. It should be completed in a private transaction Monday. This month, the drugstore chain completed a plan to refinance debt for more than two years, making about $640 million available for working capital and general corporate purposes. Imre takes Best of Show at annual competition Imre Associates said it took home the Best of Show award at the annual competition of the Public Relations Society of America.

The honor was for a pro bono program developed for the Maryland Disability Law Center entitled, "Access Demanded Under ADA Law." Elsewhere flglit for control of its cable network Corp. won a key battle for control of its cable network yesterday, as a federal appeals court rejected efforts by Portland, to open the network to competing Internet service providers. Officials in Portland, San Francisco, Broward County, and other local governments, have argued that access to the Internet through cable networks should be a matter of local governance, as cable TV franchises are. But the 9th U.S. Circuit Court of Appeals ruled that which has spent billions buying cable companies to create a national network for local telephone and high-speed Internet service, doesn't fit the legal definition of a cable network.

It is a telecommunications service, governable only by federal law, the court said. This column was compiled from reports by Sun staff writers, the Associated Press, Bloomberg News and Reuters. The Smartest Financial Companies Will exhibit in The Baltimore Sun's Dollars and Sense Personal Finance Conference October 14, 2000 The Baltimore Convention Center Yield the benefits of participating in the second annual The Baltimore Sun's Dollars Sense Personal Finance Conference. Thousands of potential investors and financial services prospects will attend this year's conference. Don't miss this qualified audience, reserve your booth space today.

Plan initially is for those who lost Medicare HMO By M. William Salganik BUN STAFF CareFirst BlueCross Blue-Shield said yesterday that it began enrolling people in the new Senior Rural Pharmacy Program. The plan, worked out in the closing moments of the last legislative session, obligates CareFirst and two other insurers to provide a $5.4 million subsidy for prescription coverage for rural seniors who lost Medicare HMOs. In return, however, the insurers get to keep $40 million in hospital discounts that the legislature considered ending or cutting. CareFirst sent a mailing this week to 13,100 rural seniors believed to be eligible for the program, according to Jeffery W.

Valentine, director of corporate communications. For the first six months, the plan will be open only to seniors who were enrolled in CareFirst's Medicare HMO at the end of last year when it ended operations in 17 rural counties. After that, other rural seniors can Join, but the plan has a limit of 15,000 members. Seniors will pay $40 a month for prescription coverage. After paying $50 a year in prescriptions out of pocket, they will be eligible for up to $1,000 a year in drug coverage.

There is a co-payment for each prescription: $10 for generic drugs, $20 for "preferred" brand-name prescriptions and $35 for others not on the preferred list. After the $1,000 is exhausted, seniors have to pay for prescriptions but can get the same discount CareFirst gets about 15 percent off list price. The plan is offered in Allegany, Calvert, Caroline, Carroll, Cecil, Charles, Dorchester, Frederick, Garrett, Kent, Queen Anne's, St. Mary's, Somerset, Talbot, Washington, Wicomico and Worcester counties. The insurers providing the subsidy for the prescription program will benefit from a 4 percent discount on hospital bills, which the state offers to insurers who offer "open-enrollment" health insurance policies.

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