UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDED
SCHEDULE 13E-3
Schedule 13E-3 [Section 240.13e-3], Rule 13e-3 Transaction
Statement Pursuant to Section 13(e) of the Securities
Exchange Act of 1934 and Rule 13e-3 [Section 240.13e-3] thereunder
RULE 13e-3 TRANSACTION STATEMENT
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(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
CROWN ENERGY CORPORATION
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(Name of Issuer)
Crown Energy Corporation
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(Name of Person(s) Filing Statement)
Common Stock, par value $0.02 per share
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(Title of Class of Securities)
228341301
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(CUSIP Number of Class of Securities)
Jay Mealey
1710 West 2600 South
Woods Cross, Utah 84087
Telephone: 801-296-0166
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate box):
[X] a. The filing of solicitation materials or an information
statement subject to Regulation 14A [17 CFR 240.14a-1 to
240.14b-2], Regulation 14C [17 CFR 240.14c-1 to 240.14c-101]
or Rule 13e-3(c) [Section 240.13e-3(c) under the Securities
Exchange Act of 1934.
[ ] b. The filing of a registration statement under the Securities
Act of 1933.
[ ] c. A tender offer.
[ ] d. None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [X]
Check the following box if the filing is a final amendment reporting
the results of the transaction: [ ]
Calculation of Filing Fee
Transaction Valuation* Amount of Filing Fee
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$18,631 $3.72
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* Based on the average of the bid and asked Pink Sheets quotation of $0.025
per share for the maximum number of shares that may be cancelled on
expiration of scrip issued for fractional shares to the 746 stockholders of
record as a result of the 1,000-to-one reverse stock split.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid:
Form or Registration No.:
Filing Party:
Date Filed:
ITEM 1. SUMMARY TERM SHEET
The information set forth under the caption "Summary of Actions: 1. The
Reverse Split" in the information statement attached hereto as Exhibit 99.01 is
incorporated by reference.
ITEM 2. SUBJECT COMPANY INFORMATION
(a) Name and Address. The name, address and telephone numbers of its
principal executive offices are as follows:
Crown Energy Corporation
1710 West 2600 South
Woods Cross, Utah, 84087
Telephone: (801) 296-0166
Telecopy: (801) 296-9590
(b) Securities. As of June 30, 2004, the Company had issued and
outstanding 26,482,388 shares of common stock, par value $0.02 per share.
(c) Trading Market and Price. The Company's common stock has been
traded in the over-the-counter market since 1980. The common stock was quoted
under the symbol "CROE" on the Nasdaq OTC Bulletin Board prior to June 2, 2004,
and thereafter on the Pink Sheets published by Pink Sheets, LLP, due to the
Company's failure to file timely periodic reports under the Securities Exchange
Act. The following table sets forth the range of high and low bid quotations of
the common stock as reported by the OTC Bulletin Board or the Pink Sheets, as
the case may be, for each full quarter during the two most recent fiscal years
and for the subsequent interim period. The table represents prices between
dealers, and does not include retail markups, markdowns or commissions, and may
not represent actual transactions:
Low High
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2004:
Third Quarter (through July 13, 2004)...... $0.01 $0.04
Second Quarter............................. 0.01 0.02
First Quarter.............................. 0.02 0.04
2003:
Fourth Quarter............................. 0.01 0.03
Third Quarter.............................. 0.01 0.015
Second Quarter............................. 0.01 0.02
First Quarter.............................. 0.01 0.02
2002:
Fourth Quarter............................. 0.008 0.012
Third Quarter.............................. 0.011 0.02
Second Quarter............................. 0.02 0.055
First Quarter.............................. 0.011 0.04
(d) Dividends. The Company has not paid any dividends or made any other
distributions on the common stock, and the Company does not anticipate paying
any cash dividends on the common stock in the foreseeable future. The terms of
the Company's Series A Preferred Stock prohibit the payment of dividends on
common stock at any time that accrued dividends on the Series A Preferred Stock
are unpaid. As of March 31, 2004, accrued but unpaid dividends equaled $1.5
million. The Company estimates that, as of March 31, 2004, the Company had
approximately 746 stockholders.
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(e) Prior Public Offerings. The Company has made no underwritten public
offerings for its common stock for cash during the past three years that was
either registered under the Securities Act of 1933 or exempt from registration
under Regulation A.
(f) Prior Stock Purchases. The Company has not purchased any subject
securities during the past two years.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON
(a) Name and Address. The name, business address and business telephone
numbers of the Company are as follows:
Crown Energy Corporation
1710 West 2600 South
Woods Cross, Utah, 84087
Telephone: (801) 296-0166
Telecopy: (801) 296-9590
(b) Business and Background of Entities. Not applicable.
(c) Business and Background of Natural Persons. Not applicable.
ITEM 4. TERMS OF THE TRANSACTION
(a) Material Terms. The information set forth under the caption "The
Reverse Split" in the information statement attached hereto as Exhibit 99.01 is
incorporated by reference.
(c) Different Terms. None.
(d) Appraisal Rights. There are no appraisal rights or other rights
available under state law to security holders that object to the transaction.
(e) Provisions for Unaffiliated Security Holders. Neither the Company
nor any affiliated filing person has engaged in any transaction to grant
unaffiliated securities holders access to the corporate files of any filing
person or to obtain counsel or appraisal services at the expense of the filing
person.
(f) Eligibility for Listing or Trading. Not applicable.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
(a) Transactions. In 1997, the Company sold in an arm's-length
transaction to an Enron Corp. subsidiary, an unrelated third party, for $5.0
million in cash, 500,000 shares of $10 Series A Cumulative Convertible Preferred
Stock and a warrant to purchase at $0.002 per share an amount equal to 8% of the
shares of common stock then outstanding and reserved for issuance, or
approximately 925,771 shares.
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During 1997 through 2000, as the Company encountered technical
construction and operating difficulties respecting its Asphalt Ridge plant,
leading to pre-operating cost overruns and continuing delays while its asphalt
manufacturing and distribution business continued to experience disappointing
results, the Series A Cumulative Convertible Preferred Stock issued to an Enron
subsidiary in 1997 continued to accrue dividends. In approximately June 2001,
Enron advised the Company that Enron intended to dispose of the Series A
Cumulative Preferred Stock and inquired of the Company's interest in purchasing
or redeeming the preferred stock and advised the Company that it would also be
approaching third parties about the possible sale of the securities. The Company
and its management were, among other things, concerned that Enron might attempt
to sell the securities to a third party to the detriment of the Company and its
stockholders, and the Company and its management sought the financial means to
repurchase the securities from Enron.
The Company did not have the financial resources with which to
repurchase the preferred stock and warrants, even at a significant discount to
the original purchase price of the securities. In addition, the Company was
advised by outside legal counsel that, in view of the Company's financial
position, Utah Law prohibited the Company from redeeming the preferred stock.
Redemptions of stock are treated under Section 16-10a-640 of the Utah Revised
Business Corporation Act as distributions to stockholders, so that the Series A
Cumulative Convertible Preferred Stock could not be redeemed if, after the
redemption, the Company would be unable to pay its debts as they became due in
the ordinary course of business (the equity insolvency test) or if the Company's
total assets, based on their fair valuation as distinguished from book value,
would be less than the sum of its total liabilities (the balance sheet test) as
determined by the board of directors. UTAH CODE Ann. Section 16-10a-640(3). Upon
review of these requirements and the status of the Company with its legal
advisors and outside accountants, the board determined that the Company was, in
any case, prohibited from acquiring the Enron securities under the foregoing
statutory provisions.
Accordingly, the Company sought the financial participation of its
principal stockholders and third-party investors. As a result, Jay Mealey and
Andrew Buffmire, executive officers and directors of the Company, took the
initiative with two others, Jeff Fishman and Alexander L. Searl, to organize
Manhattan Goose, L.L.C., a Utah limited liability company, to negotiate the
purchase of the Series A Cumulative Convertible Preferred Stock, accumulated but
unpaid dividends, warrant and associated rights from Enron. Manhattan Goose was
owned by Jay Mealey, 32.5%; Andrew W. Buffmire, 32.5%; Jeff Fishman, 10.0%; and
Alexander L. Searl, 25.0%.
As a condition precedent to completing the sale of the Company's
securities to Manhattan Goose, Enron required that the Company formally waive
its right of first refusal. Accordingly, on October 25, 2001, Jay Mealey and
Andrew Buffmire advised the Company's board of directors of the circumstances
and proposed terms of Manhattan Goose's proposed purchase of the securities from
Enron, including advice that they owned interests in Manhattan Goose, the
purchase of the preferred stock and the waiver of the Company's right of first
refusal constituted a "directors' conflicting interest transaction," as defined
by the Utah Revised Business Corporation Act, and they would not vote on the
matter before the board since the third director represented the only "qualified
director," as defined in the Utah corporate statute. Messrs. Mealey and Buffmire
indicated that it was their opinion that the purchase of the preferred stock by
Manhattan Goose was objectively fair to the Company since the result of the
purchase would be that the preferred stock would be at least partially owned by
management personnel who already controlled the Company, instead of an
unaffiliated third party with no stake in the Company's success. The board also
discussed the fact that, given the Company's financial condition at that time,
the Company could not legally purchase the preferred stock because of Section
16-10-640 of the Utah Revised Business Corporation Act, which prohibits the
redemption of stock if following the redemption, the liabilities of a
corporation will exceed its assets.
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Following a thorough discussion of the matter, Messrs. Mealey and
Buffmire recused themselves from voting, and upon a motion duly made and
recorded, the board formally waived the Company's right of first refusal to
purchase the securities from Enron by the affirmative vote of the sole qualified
director, James A. Middleton, who was then the chairman of the board of
directors.
On November 1, 2001 (just one week before Enron publicly announced the
restatement of prior period financial statements and certain related-party
transactions at the beginning of its financial debacle), Manhattan Goose
purchased from Enron for $263,000 the Series A Cumulative Convertible Preferred
Stock, accumulated dividends, 317,069 shares of common stock previously issued
as a dividend payment, the warrant, and related rights. Manhattan Goose reported
that each member of Manhattan Goose used personal funds to provide his pro rata
share of this purchase price; the purchase by Manhattan Goose was for the
purpose of making a financial investment in the Company; and as current officers
and directors of the Company, Messrs. Mealey and Buffmire participated in the
transaction in order to ensure that partial ownership of the preferred interest
remain with persons involved with the Company, increase the amount of their
equity stake in the Company, and make a financial investment in the Company.
On November 25, 2002, Jay Mealey used personal funds to purchase the
Manhattan Goose membership interests held by Alexander Searl and Jeff Fishman
for $78,900 and $31,560, respectively.
On November 26, 2002, Manhattan Goose distributed 4,585,806 shares of
the Company's common stock to Andrew Buffmire in partial redemption of his
ownership interest in Manhattan Goose. On November 27, 2002, Jay Mealey used
personal funds to purchase the remaining membership interest in Manhattan Goose
held by Mr. Buffmire for $102,570. Because of his 32.5% ownership interest in
Manhattan Goose, this transaction represented the sale by Mr. Buffmire for
$102,570 in cash and 4,585,806 shares of common stock of the equivalent
ownership of 162,500 shares of Series A Cumulative Convertible Preferred Stock
with an aggregate liquidation preference of $1,625,000, plus accrued and unpaid
dividends of $443,083, together with warrants to purchase 300,876 shares of
common stock at $0.002 per share. Immediately after the foregoing transactions,
Manhattan Goose dissolved and distributed 9,524,366 shares of the Company's
common stock and 500,000 shares of the Company's Series A Cumulative Convertible
Preferred Stock and accumulated dividends receivable to Jay Mealey. Immediately
thereafter, Mr. Mealey organized the Mealey Family Limited Partnership and
conveyed to it all 9,524,366 shares of common stock and 500,000 shares of
preferred stock, the warrant to purchase shares in the Company, accumulated
dividends receivable, and all related rights in consideration of 100% ownership
interest in the partnership. As a current officer and director of the Company,
Mr. Mealey effected the foregoing transactions in order to ensure that ownership
of the common and preferred stock remain with persons involved with the Company,
increase the amount of his family's equity stake in the Company, and as a
financial investment in the Company.
In partial payment of accrued and outstanding dividend obligations
payable on the Series A Cumulative Convertible Preferred Stock, on February 28,
2002, the Company paid dividends of $200,000 in 13,793,103 shares of common
stock to Manhattan Goose. On November 27, 2002, the Company paid dividends of
$300,000 in cash to Manhattan Goose. On December 30, 2002, the Company paid
dividends of $100,000 in cash to Mealey Family Limited Partnership. At December
31, 2003, and March 31, 2004, the Company owed $1.4 million and $1.5 million,
respectively, in additional accumulated preferred stock dividends payable.
(b) Significant Corporate Events. None.
(c) Negotiations or Contacts. None.
(e) Agreements Involving the Subject Company's Securities. None.
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ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
(c) Plans:
(1) There are no plans for any extraordinary transaction, such
as a merger, reorganization or liquidation, involving the Company or
any of its subsidiaries.
(2) The Company proposes to form with Idaho Asphalt Supply,
Inc., an unaffiliated asphalt products distributor, a newly organized
limited liability company, or Newco, to produce and market asphalt
products through the transfer of substantially all of its asphalt
business, operations and assets to Newco in consideration of a $7.5
million promissory note payable from Newco earnings, assumption of
approximately $2.5 million of liabilities, and a 49% interest in Newco,
with the remaining 51% interest in Newco owned by Idaho Asphalt, which
will provide Newco with working capital financing for its operations.
The information set forth under the caption "The Proposed Joint Venture
Formation" in the information statement attached hereto as Exhibit
99.01 is incorporated by reference.
(3) There are no plans for any material change in the present
dividend rate or policy, or indebtedness or capitalization of the
Company.
(4) There are no plans for any change in the present board of
directors or management of the Company, including, but not limited to,
any plans or proposals to change the number or the term of directors or
to fill any existing vacancies on the board or to change any material
term of the employment contract of any executive officer. The Company
proposes to reelect the existing directors. The information set forth
under the caption "Election of Directors" in the information statement
attached hereto as Exhibit 99.01 is incorporated by reference.
(5) There are no plans for any other material change in the
Company's corporate structure or business.
(6) The Company's common stock will become eligible for
termination of registration under Section 12(g)(4) of the Securities
Exchange Act of 1934.
Immediately after the effective date of the reverse split, the
Company will file with the Securities and Exchange Commission a Form
15, "Certification and Notice of Termination of Registration under
Section 12(g) of the Securities Exchange Act of 1934 or Suspension of
Duty to File Reports Under Sections 13 and 15(d) of the Securities
Exchange Act of 1934."
As a result of the termination of registration under Section
12(g) of the Securities Exchange Act of 1934, the Company's common
stock would then no longer be eligible for quotation on the OTC
Bulletin Board. The Company will make filings with the OTC Bulletin
Board to discontinue trading in its common stock.
The information set forth under the caption "The Reverse
Split" in the information statement attached hereto as Exhibit 99.01 is
incorporated by reference.
(7) See (6) above.
(8) Not applicable.
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ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS
(a) Purposes. The information set forth under "The Reverse Split:
Special Factors--Purposes" in the information statement attached hereto as
Exhibit 99.01 is incorporated by reference.
(b) Alternatives. The information set forth under "The Reverse Split:
Special Factors--Alternatives Considered" in the information statement attached
hereto as Exhibit 99.01 is incorporated by reference.
(c) Reasons. The information set forth under "The Reverse Split:
Special Factors--Reasons for and Effects of the Reverse Split" in the
information statement attached hereto as Exhibit 99.01 is incorporated by
reference.
(d) Effects. The information set forth under "The Reverse Split:
Special Factors--Reasons for and Effects of the Reverse Split" in the
information statement attached hereto as Exhibit 99.01 is incorporated by
reference.
ITEM 8. FAIRNESS OF THE TRANSACTION
(a) Fairness. The information set forth under "The Reverse Split:
Special Factors--Fairness of the Reverse Stock Split" in the information
statement attached hereto as Exhibit 99.01 is incorporated by reference.
(b) Factors Considered in Determining Fairness. The information set
forth under "The Reverse Split: Special Factors--Fairness of the Reverse Stock
Split" in the information statement attached hereto as Exhibit 99.01 is
incorporated by reference.
(c) Approval of Security Holders. The transaction has not been
structured so that approval of at least a majority of unaffiliated security
holders is required.
(d) Unaffiliated Representative. The sole director who is not an
employee of the Company has not retained an unaffiliated representative to act
solely on behalf of unaffiliated security holders for purposes of negotiating
the terms of the Rule 13e-3 transaction.
(e) Approval of Directors. The sole director who is not an employee of
the Company has approved the terms of the Rule 13e-3 transaction.
(f) Other Offers. The Company has not received any firm offers during
the past two years for:
(1) the merger or consolidation of the Company with or into
another company, or vice versa;
(2) the sale or other transfer of all or any substantial part
of the assets of the Company, except as disclosed under the captions
"The Proposed Joint Venture Formation" and "The Reverse Stock Split:
Alternatives Considered--Possible Financing or Sale" in the information
statement attached hereto as Exhibit 99.01, which are incorporated by
reference; or
(3) a purchase of the Company's securities that would enable
the holder to exercise control of the Company.
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ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS
(a) Report, Opinion or Appraisal. The Company has not received any
report, opinion or appraisal relating to the consideration or the fairness of
the consideration to be offered to security holders or the fairness of the
transaction to security holders that are not affiliates.
(b) Preparer and Summary of the Report, Opinion or Appraisal. Not
applicable.
(c) Availability of Documents. Not applicable.
ITEM 10. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION
(a) Source of Funds. Not applicable.
(b) Conditions. Not applicable.
(c) Expenses. Set forth below is a reasonably itemized statement of all
expenses incurred or estimated to be incurred in connection with the
transaction:
Description Amount
Filing.......................................... $ 2,000
Legal........................................... 30,000
Accounting...................................... --
Financial advisor fees.......................... --
Solicitation expenses........................... 10,000
Printing costs.................................. 10,000
Miscellaneous................................... 8,000
Total......................................... $ 60,000
All fees, other than the Securities and Exchange Commission filing fee, are
estimates. The Company will pay the fees incurred in connection with the
proposed transaction.
(d) Borrowed Funds. Not applicable.
ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) Securities Ownership. The information set forth under "Security
Ownership of Certain Beneficial Owners and Management" in the information
statement attached hereto as Exhibit 99.01 is incorporated by reference.
(b) Securities Transactions. On June 8, 2004, Jay Mealey, president, a
director and a principal stockholder, purchased in a privately negotiated
transaction from Andrew Buffmire, a director, 3,089,620 shares of common stock
for $15,448, or $0.005 per share.
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ITEM 12. THE SOLICITATION OR RECOMMENDATION
(d) Intent to Tender or Vote in a Going-Private Transaction. On June
30, 2004, Jay Mealey and Andrew Buffmire, the beneficial owners of 14,431,818
shares, or 54.4%, of the Company's issued and outstanding common stock, and Jay
Mealey, the beneficial owner of all 500,000 shares of the Company's issued and
outstanding Series A Cumulative Convertible Preferred Stock (together, "the
Approving Stockholders") approved the reverse stock split. Jay Mealey is
president, a director and a principal stockholder, and Andrew Buffmire is a
director.
(e) Recommendations of Others. The persons named in response to (d) are
members of the board of directors that has unanimously recommended approval of
the reverse split by the stockholders.
ITEM 13. FINANCIAL INFORMATION
(a) Financial Information. The financial statements included in the
following reports are incorporated herein by reference:
(1) The Company's annual report on Form 10-K (file no.
000-19365) for the year ended December 31, 2003,
filed July 7, 2004;
(2) The Company's quarterly report on Form 10-Q (file no.
000-19365) for the quarter ended March 31, 2004,
filed July 7, 2004; and
(3) The Company's information statement relating to
majority written consent of stockholders filed in
preliminary form in accordance with Rule 14c-5(d)(2)
on July 14, 2004.
The Company has incurred losses in each of the two most recent fiscal years and
the most recent completed fiscal quarter for which it has filed a quarterly
report under the Securities Exchange Act of 1934. As of March 31, 2004, the
Company had a stockholders' deficit attributable to the common stock of $0.05
per share.
(b) Pro Forma Information. The presentation of pro forma information
giving effect to the reverse stock split is not deemed material.
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED
(a) Solicitations or Recommendations. No person has been engaged to
make solicitations or recommendations in connection with the reverse split.
(b) Employees and Corporate Assets. No officer, class of employee, or
corporate assets of the Company has been or will be employed or used by the
filing persons in connection with the transaction, except for the information
provided above in response to Item 10, Source and Amount of Funds or Other
Consideration.
ITEM 15. ADDITIONAL INFORMATION
There is no other material information.
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ITEM 16. EXHIBITS
The following documents are included as exhibits to this Schedule 13E-3
pursuant to Item 1016(a) through (d), (f) and (g) of Regulation M-A (Section
229.1016 of this Chapter):
Exhibit
Number Title of Document Location
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Item 1016(a) Disclosure Materials Furnished to Security Holders
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99.01 Information Statement Attached hereto.
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
CROWN ENERGY CORPORATION
By /s/ Alan L. Parker
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Alan L. Parker,
Chief Financial Officer
Dated: August 9, 2004
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