-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TjXqW+qLS2Y70GvZHxBgkyB6JDHFJXgNr2fWNUgYG+01f2PLX6IyRaadKatSL+Sd uMQ3xDncsIRm+D/ieeClkg== 0000928385-00-001587.txt : 20000517 0000928385-00-001587.hdr.sgml : 20000517 ACCESSION NUMBER: 0000928385-00-001587 CONFORMED SUBMISSION TYPE: SC 13E3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20000516 GROUP MEMBERS: CROWN CENTRAL PETROLEUM CORP /MD/ GROUP MEMBERS: ROSEMORE ACQUISITION CORPORATION GROUP MEMBERS: ROSEMORE HOLDINGS, INC. GROUP MEMBERS: ROSEMORE, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CROWN CENTRAL PETROLEUM CORP /MD/ CENTRAL INDEX KEY: 0000025885 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 520550682 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3 SEC ACT: SEC FILE NUMBER: 005-34652 FILM NUMBER: 636957 BUSINESS ADDRESS: STREET 1: ONE N CHARLES STREET STREET 2: PO BOX 1168 CITY: BALTIMORE STATE: MD ZIP: 21201 BUSINESS PHONE: 4015397400 MAIL ADDRESS: STREET 1: PO BOX 1168 STREET 2: PO BOX 1168 CITY: BALTIMORE STATE: MD ZIP: 21201 FORMER COMPANY: FORMER CONFORMED NAME: UNITED CENTRAL OIL CORP DATE OF NAME CHANGE: 19680923 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CROWN CENTRAL PETROLEUM CORP /MD/ CENTRAL INDEX KEY: 0000025885 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 520550682 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3 BUSINESS ADDRESS: STREET 1: ONE N CHARLES STREET STREET 2: PO BOX 1168 CITY: BALTIMORE STATE: MD ZIP: 21201 BUSINESS PHONE: 4015397400 MAIL ADDRESS: STREET 1: PO BOX 1168 STREET 2: PO BOX 1168 CITY: BALTIMORE STATE: MD ZIP: 21201 FORMER COMPANY: FORMER CONFORMED NAME: UNITED CENTRAL OIL CORP DATE OF NAME CHANGE: 19680923 SC 13E3 1 SCHEDULE 13E-3 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________________ SCHEDULE 13E-3 RULE 13e-3 TRANSACTION STATEMENT (PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934) ___________________ CROWN CENTRAL PETROLEUM CORPORATION (Name of the Issuer) CROWN CENTRAL PETROLEUM CORPORATION ROSEMORE, INC. ROSEMORE HOLDINGS, INC. ROSEMORE ACQUISITION CORPORATION (Name of Persons Filing Statement) CLASS A COMMON STOCK, PAR VALUE $5.00 PER SHARE CLASS B COMMON STOCK, PAR VALUE $5.00 PER SHARE (Title of Class of Securities) 228219-10-1 228219-30-9 (CUSIP Number of Class of Securities) THOMAS L. OWSLEY EDWARD L. ROSENBERG CROWN CENTRAL PETROLEUM ROSEMORE, INC. CORPORATION ONE NORTH CHARLES STREET ONE NORTH CHARLES STREET SUITE 2300 BALTIMORE, MARYLAND 21201 BALTIMORE, MARYLAND 21201 (410) 539-7400 (410) 347-7080 (Name, address and telephone number of person authorized to receive notices and communications on behalf of persons filing statement) COPIES TO: DAVID H. PANKEY JOHN A. MARZULLI, JR. MCGUIRE, WOODS, BATTLE SHEARMAN & STERLING & BOOTHE LLP 599 LEXINGTON AVENUE WASHINGTON SQUARE NEW YORK, NEW YORK 10022 1050 CONNECTICUT AVENUE, N.W. (212) 848-4000 WASHINGTON, D.C. 20036 (202) 857-1716 ___________________ This statement is filed in connection with (check the appropriate box): a. [X] The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the Securities Exchange Act of 1934. b. [ ] The filing of a registration statement under the Securities Exchange Act of 1934. c. [ ] A tender offer. d. [ ] None of the above. Check the following box if the soliciting materials or information statement referred to in box (a) are preliminary copies. [X] CALCULATION OF FILING FEE
TRANSACTION VALUATION*: AMOUNT OF FILING FEE: - -------------------------------------------------------------------------------- $67,574,459 $13,514.89 - --------------------------------------------------------------------------------
* For purposes of calculating the filing fee only. This calculation assumes the purchase of 7,113,101 shares (representing 2,450,868 and 4,662,233 shares of Class A and Class B common stock, respectively) at $9.50 per share in cash. In accordance with Rule 0-11 under the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying the amount calculated pursuant to the preceding sentence by 1/50 of one percent. [X] 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: $13,514.89 Form of Registration No.: Schedule 14A Proxy Statement Filing Party: CROWN CENTRAL PETROLEUM CORPORATION Date Filed: May 15, 2000 2 INTRODUCTION This Rule 13e-3 Transaction Statement on Schedule 13E-3 is being jointly filed with the Securities and Exchange Commission by Crown Central Petroleum Corporation ("Crown"), Rosemore, Inc. ("Rosemore"), Rosemore Holdings, Inc. ("Holdings") and Rosemore Acquisition Corporation ("RAC"), all of which are Maryland corporations. This Transaction Statement relates to the Agreement and Plan of Merger, dated as of April 7, 2000 (the "Merger Agreement"), among Crown, Rosemore and RAC pursuant to which RAC will be merged with and into Crown, with Crown being the surviving corporation. Subject to the terms and conditions of the Merger Agreement, at the effective time of the merger, each outstanding share of Crown common stock, other than shares held by Rosemore through its wholly owned subsidiary, Holdings, will be converted into the right to receive $9.50 in cash. The terms and conditions of the Merger Agreement are described in the Preliminary Proxy Statement of Crown being filed with the Securities and Exchange Commission concurrently with the filing of this Transaction Statement. A copy of the Proxy Statement is filed with this Transaction Statement as Exhibit a(4), and a copy of the Merger Agreement is attached as Exhibit A to the Proxy Statement. The cross reference sheet below is supplied pursuant to General Instruction F to Schedule 13E-3 and shows the location in the Proxy Statement of the information required in response to the items of this Transaction Statement. The information contained in this Transaction Statement concerning Crown, was supplied by Crown. Rosemore, Holdings and RAC take no responsibility for the accuracy of such information. The information contained in this Transaction Statement concerning Rosemore, Holdings and RAC was supplied by Rosemore, Holdings and RAC. Crown takes no responsibility for the accuracy of such information. 3 ITEM 1. SUMMARY TERM SHEET The information set forth under the caption "SUMMARY TERM SHEET" of the Proxy Statement is incorporated into this Transaction Statement by reference. ITEM 2. SUBJECT COMPANY INFORMATION (a) NAME AND ADDRESS. The information set forth under the caption "SUMMARY - The Parties to the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (b) SECURITIES. The information set forth under the caption "SUMMARY - Record Date; Stock Entitled to Vote" in the Proxy Statement is incorporated into this Transaction Statement by reference. (c) TRADING MARKET AND PRICE. The information set forth under the caption "MARKET PRICE AND DIVIDEND INFORMATION - Common Stock Market Prices" in the Proxy Statement is incorporated into this Transaction Statement by reference. (d) DIVIDENDS. The information set forth under the caption "MARKET PRICE AND DIVIDEND INFORMATION - Dividend Policy" in the Proxy Statement is incorporated into this Transaction Statement by reference. (e) PRIOR PUBLIC OFFERINGS. Not applicable. (f) PRIOR STOCK PURCHASES. Not applicable. ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON (a) NAME AND ADDRESS. This Transaction Statement is being filed jointly by Crown (which is the issuer of the classes of equity securities that are the subject of the Rule 13e-3 transaction), Rosemore, Holdings and RAC. The information set forth under the caption "SUMMARY - The Parties to the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (b) BUSINESS AND BACKGROUND OF ENTITIES. The information set forth under the caption "SUMMARY - The Parties to the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. None of Crown, Rosemore, Holdings or RAC was, during the last five years: (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. (c) BUSINESS AND BACKGROUND OF NATURAL PERSONS. CROWN The information set forth under the caption "Item 10 - Directors and Executive Officers of the Registrant" in Crown's Annual Report for the Fiscal Year ended December 31, 1999 on Form 10-K is incorporated into this Transaction Statement by reference. The business address of Mr. Africk and Mr. Dacey is Evolution Partners, LLC, 1200 North Federal Highway, Suite 211, Boca Raton, Florida 33432. The business address of Mr. Bunting is Bunting Management Group, 9690 Deerco Road, Suite 700, Timonium, Maryland 21093. The business address of Mr. Jews is CaseFirst BlueCross BlueShield, 10455 Mill Run Circle, Owings Mills, Maryland 21117. The business address of Father Ridley is Loyola College of Maryland, 4501 North Charles Street, Baltimore, Maryland 21201. Unless otherwise noted below, the business address of the executive officers of Crown is Crown Central Petroleum Corporation, One North Charles Street, Baltimore, Maryland 21201. The business address of Mr. Evans is Crown Central Petroleum Corporation, 8201 Park Central Drive, Richmond, Virginia 23227. The business address of Mr. Marple and Mr. Wolters is Crown Central Petroleum Corporation, 4747 Bellaire Blvd., Bellaire, Texas 77401. The business address of Mr. Trembly is Crown Central Petroleum Corporation, 111 Red Bluff Road, Pasadena, Texas 77506. None of the directors or officers of Crown was, during the last five years: (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. All directors and officers of Crown are citizens of the United States of America. ROSEMORE - DIRECTORS Lisa J. Bertelsen, Director and Vice President of Rosemore since January 1999. The business address of Lisa J. Bertelsen is Rosemore, Inc., One North Charles Street, Suite 2300, Baltimore, Maryland 21201. Jeffrey A. Hoffberger, Director and Vice President of Rosemore since January 1999; Director of Holdings since July 1999; self-employed professional audio engineer since 1988. The business address of Mr. Hoffberger is Music Management Services LLC, 111 South Delancey Place, Atlantic City, New Jersey 08401. Judith R. Hoffberger, Director of Rosemore since January 1999; homemaker. Ruth R. Marder, Director of Rosemore and Holdings since January 1999; homemaker. William E. Mayer, Director of Rosemore since January 1999; founding partner of Development Capital LLC, which invests in private and public companies. Mr. Mayer serves as a Director of Johns Manville Corporation since April 1996; Director of Lee Enterprises since November 1998; Director of Systech Retail Systems, Inc. since March 2000; Trustee of Colonial Group of Mutual Funds since April 1992; Director of Hambrecht & Quist Group from April 1999 to December 1999; Director of Chama Value, LLC from April 1990 to May 1997; Director of Riverwood International Corporation from 1992 to 1996; and Dean of the College of Business and Management at the University of Maryland from September 1992 to December 1996. The business address of Mr. Mayer is Development Capital LLC, 500 Park Avenue, Suite 510, New York, New York 10020. Donald Mering, Director of Rosemore since January 1999, and a partner of the law firm of Ober, Kaler, Grimes & Shriver, a professional corporation, since 1994. The business address of Mr. Mering is Ober, Kaler, Grimes & Shriver, 120 East Baltimore St., Baltimore, MD 21201. Clive R. G. O'Grady, Director of Rosemore and Holdings since January 1999; Secretary of Rosemore since January 1999. Director of Attransco, Inc., since May 1996 and partner at the law firm of McGuire, Woods, Battle & Boothe LLP since 1991. The business address of Mr. O'Grady is McGuire, Woods, Battle & Boothe LLP, 1750 Tysons Boulevard, Suite 1800, McLean, Virginia 22102. Edward L. Rosenberg, Director, President and Chief Executive Officer of Rosemore since January 1999; Director and President of Holdings; Director, President and Chief Executive Officer of Rosemore Aviation, Inc.; Director and President of Rosemore Calvert, Inc.; Director and Chairman of Tema Oil & Gas Company and Director and Chairman of Gateway Gathering and Marketing Company since January 1999. Director, President and Chief Executive Officer of RAC. Prior to joining Rosemore, Mr. Rosenberg was the Executive Vice President-Supply & Transportation of Crown since February 1998; Senior Vice President-Supply & Transportation of Crown from May 1996 to January 1998; and Senior Vice President-Administration, Corporate Development and Long Range Planning of Crown from April 1995 to May 1996. The business address of Mr. Rosenberg is Rosemore, Inc., One North Charles Street, Suite 2300, Baltimore, Maryland 21201. Henry A. Rosenberg, Jr., Director and Chairman of the Rosemore Board since January 1999; Director of Holdings, Rosemore Calvert, Inc., Tema Oil and Gas Company and Gateway Gathering and Marketing Company since January 1999. In addition, Mr. Rosenberg is Chairman of the Crown Board and President and Chief Executive Officer of Crown. ROSEMORE - EXECUTIVE OFFICERS Edward L. Rosenberg - see under the caption "ROSEMORE - DIRECTORS" above. Kenneth H. Trout, Executive Vice President of Rosemore since January 1999; Director and Executive Vice President of Holdings since January 1999; Director of Rosemore Calvert, Inc., Tema Oil and Gas Company and Gateway Gathering and Marketing Company since January 1999; Director and Executive Vice President of Rosemore Aviation and Executive Vice President of RAC; Director of Bay National Corporation since September 1999; Director of Bay National Bank since April 2000; Director of KCI Technologies, Inc. since January 1999; Chairman of the Board of The National Aquarium in Baltimore and Director of National Aquarium in Baltimore and Director of National Aquarium in Baltimore Foundation since May 1999; Director of the Maryland Business Roundtable for Education since 1994; and Vice Chairman of The College of Notre Dame of Maryland since 1998. Prior to joining Rosemore, Mr. Trout was the Senior Executive Vice President of Signet Banking Corporation where he had been employed since July 1970. The business address of Mr. Trout is Rosemore, Inc., One North Charles Street, Suite 2300, Baltimore, Maryland 21201. Henry A. Rosenberg, Jr. - see under the caption "ROSEMORE - DIRECTORS" above. Barry L. Miller, Senior Vice President, Treasurer and Chief Financial Officer of Rosemore since January 1999. In addition, Mr. Miller is the Director and Treasurer of Holdings; Director, Senior Vice President, Treasurer and Chief Financial Officer of Rosemore Aviation, Inc.; Treasurer of Rosemore Calvert, Inc., Tema Oil and Gas Company and Gateway Gathering and Marketing Company; and Senior Vice President, Treasurer and Chief Financial Officer of RAC. Prior to the reorganization of American Trading and Production Corporation, Mr. Miller was employed by American Trading as Vice President - Taxation. The business address of Mr. Miller is Rosemore, Inc., One North Charles Street, Suite 2300, Baltimore, Maryland 21201. Tommie E. Yates, Senior Vice President of Rosemore; Director and President of Tema Oil and Gas Company; and Director and President of Gateway Gathering and Marketing Company since 1999. The business address of Mr. Yates is Tema Oil and Gas Company, 16430 Park Ten Place, Suite 500, Houston, Texas 77084. Lisa J. Bertelsen - see under the caption "ROSEMORE-DIRECTORS" above. Jeffrey A. Hoffberger - see under the caption "ROSEMORE-DIRECTORS" above. Clive R. G. O'Grady - see under the caption "ROSEMORE-DIRECTORS" above. HOLDINGS - DIRECTORS Ruth R. Marder - see under the caption "ROSEMORE-DIRECTORS" above. Barry L. Miller - see under the caption "ROSEMORE-EXECUTIVE OFFICERS" above. Clive R. G. O'Grady - see under the caption "ROSEMORE-DIRECTORS" above. Edward L. Rosenberg - see under the caption "ROSEMORE-DIRECTORS" above. Henry A. Rosenberg, Jr. - see under the caption "ROSEMORE-DIRECTORS" above. Kenneth H. Trout - see under the caption "ROSEMORE-EXECUTIVE OFFICERS" above. HOLDINGS - OFFICERS Edward L. Rosenberg - see under the caption "ROSEMORE-DIRECTORS" above. Kenneth H. Trout - see under the caption "ROSEMORE-EXECUTIVE OFFICERS" above. Barry L. Miller - see under the caption "ROSEMORE-EXECUTIVE OFFICERS" above. RAC - SOLE DIRECTOR Edward L. Rosenberg - see under the caption "ROSEMORE-DIRECTORS" above. RAC - EXECUTIVE OFFICERS Edward L. Rosenberg - see under the caption "ROSEMORE-DIRECTORS" above. Kenneth H. Trout - see under the caption "ROSEMORE-EXECUTIVE OFFICERS" above. Barry L. Miller - see under the caption "ROSEMORE-EXECUTIVE OFFICERS" above. None of the directors or officers of Rosemore, Holdings and RAC was, during the last five years: (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. All directors and executive officers of Rosemore, Holdings and RAC are citizens of the United States of America. ITEM 4. TERMS OF THE TRANSACTION (a) MATERIAL TERMS. The information set forth under the captions "SUMMARY - The Merger," "THE MERGER - Merger Consideration," "SPECIAL FACTORS - Crown's Reasons for the Merger and Statement as to the Fairness of the Merger," "SPECIAL FACTORS - Rosemore's Purposes and Reasons for the Merger," "THE SPECIAL MEETING - Required Vote," "THE MERGER - Accounting Treatment" and "SPECIAL FACTORS 4 - Certain Federal Income Tax Consequences" in the Proxy Statement is incorporated into this Transaction Statement by reference. (c) DIFFERENT TERMS. Not applicable. (d) APPRAISAL RIGHTS. The information set forth under the caption "THE MERGER - No Appraisal Rights" in the Proxy Statement is incorporated into this Transaction Statement by reference. (e) PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS. None. (f) ELIGIBILITY FOR LISTING OR TRADING. Not applicable. ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS (a) TRANSACTIONS. The information set forth under the caption "RELATED PARTY TRANSACTIONS" in the Proxy Statement is incorporated into this Transaction Statement by reference. (b) SIGNIFICANT CORPORATE EVENTS. The information set forth under the caption "SPECIAL FACTORS - Background of the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (c) NEGOTIATIONS OR CONTACTS. The information set forth under the caption "SPECIAL FACTORS - Background of the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (e) AGREEMENTS INVOLVING THE SUBJECT COMPANY'S SECURITIES. The information set forth under the captions "THE MERGER AGREEMENT" and "SHAREHOLDER RIGHTS PLAN" in the Proxy Statement is incorporated into this Transaction Statement by reference. ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS (b) USE OF SECURITIES ACQUIRED. The information set forth under the captions "SPECIAL FACTORS - Effects of the Merger" and "THE MERGER - Delisting and Deregistration of Crown Common Stock After the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (c) PLANS. The information set forth under the captions "SPECIAL FACTORS - Rosemore's Plans for Crown After the Merger" and "THE MERGER - Delisting and Deregistration of Crown Common Stock After the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. 5 ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS (a) PURPOSES. The information set forth under the captions "SPECIAL FACTORS - Purpose of the Merger" and "SPECIAL FACTORS - Rosemore's Purposes and Reasons for the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (b) ALTERNATIVES. The information set forth under the captions "SPECIAL FACTORS - Background of the Merger," "SPECIAL FACTORS - Reasons for the Merger and Statement as to the Fairness of the Merger" and "SPECIAL FACTORS - Rosemore's Purposes and Reasons for the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (c) REASONS. The information set forth under the captions "SPECIAL FACTORS - Background of the Merger," "SPECIAL FACTORS - Purpose of the Merger," "SPECIAL FACTORS - Crown's Reasons for the Merger and Statement as to the Fairness of the Merger" and "SPECIAL FACTORS - Rosemore's Purposes and Reasons for the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (d) EFFECTS. The information set forth under the captions "SPECIAL FACTORS - Effects of the Merger," "SPECIAL FACTORS - Certain Federal Income Tax Consequences" and "THE MERGER - Delisting and Deregistration of Crown Common Stock After the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. ITEM 8. FAIRNESS OF THE TRANSACTION (a) FAIRNESS. The information set forth under the captions "SPECIAL FACTORS - Crown's Reasons for the Merger and Statement as to the Fairness of the Merger" and "SPECIAL FACTORS - Rosemore's Statement as to Fairness of the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (b) FACTORS CONSIDERED IN DETERMINING FAIRNESS. The information set forth under the captions "SPECIAL FACTORS - Crown's Reasons for the Merger and Statement as to the Fairness of the Merger" and "SPECIAL FACTORS - Rosemore's Statement as to Fairness of the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (c) APPROVAL OF SECURITY HOLDERS. The information set forth under the caption "THE SPECIAL MEETING - Required Vote" in the Proxy Statement is incorporated into this Transaction Statement by reference. (d) UNAFFILIATED REPRESENTATIVE. The information set forth under the captions "SPECIAL FACTORS - Background of the Merger" and "SPECIAL FACTORS - Crown's Reasons for the Merger and Statement as to the Fairness of the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (e) APPROVAL OF DIRECTORS. The information set forth under the caption "SPECIAL FACTORS - Background of the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. 6 (f) OTHER OFFERS. The information set forth under the captions "SPECIAL FACTORS - Background of the Merger" and "SPECIAL FACTORS - Crown's Reasons for the Merger and Statement as to the Fairness of the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS (a) REPORT, OPINION OR APPRAISAL. The information set forth under the captions "SPECIAL FACTORS - Opinion of Credit Suisse First Boston" and "SPECIAL FACTORS - Financial Report Prepared by Aegis Muse" in the Proxy Statement is incorporated into this Transaction Statement by reference. (b) PREPARER AND SUMMARY OF THE REPORT, OPINION OR APPRAISAL. The information set forth under the captions "SPECIAL FACTORS - Opinion of Credit Suisse First Boston" and "SPECIAL FACTORS - Financial Report Prepared by Aegis Muse" in the Proxy Statement is incorporated into this Transaction Statement by reference. (c) AVAILABILITY OF DOCUMENTS. The information set forth under the caption "WHERE YOU CAN FIND MORE INFORMATION" in the Proxy Statement is incorporated into this Transaction Statement by reference. ITEM 10. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION (a) SOURCE OF FUNDS. The information set forth under the caption "THE MERGER - Merger Financing; Expenses of the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (b) CONDITIONS. None. (c) EXPENSES. The information set forth under the caption "THE MERGER - Merger Financing; Expenses of the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (d)(1) BORROWED FUNDS. The information set forth under the caption "THE MERGER - Merger Financing; Expenses of the Merger" in the Proxy Statement is incorporated into this Transaction Statement by reference. (d)(2) None. 7 ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY (a) SECURITIES OWNERSHIP. The information set forth under the caption "SECURITY OWNERSHIP OF FIVE PERCENT BENEFICIAL OWNERS AND MANAGEMENT" in the Proxy Statement is incorporated into this Transaction Statement by reference. (b) SECURITIES TRANSACTIONS. Not applicable. ITEM 12. SOLICITATION OR RECOMMENDATION (d) INTENT TO TENDER OR VOTE IN A GOING-PRIVATE TRANSACTION. The information set forth under the caption "THE SPECIAL MEETING - Required Vote" in the Proxy Statement is incorporated into this Transaction Statement by reference. (e) RECOMMENDATIONS OF OTHERS. The information set forth under the caption "SPECIAL FACTORS - Recommendation of Crown's Board of Directors" in the Proxy Statement is incorporated into this Transaction Statement by reference. ITEM 13. FINANCIAL STATEMENTS (a) FINANCIAL INFORMATION. The information set forth under the captions "SELECTED CONSOLIDATED FINANCIAL INFORMATION OF CROWN" in the Proxy Statement, "ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" in Crown's Annual Report for the Fiscal Year ended December 31, 1999 on Form 10-K and "Item 1 - FINANCIAL STATEMENTS" in Crown's Quarterly Report for the Quarter ended March 31, 2000 on Form 10-Q is incorporated into this Transaction Statement by reference. (b) PRO FORMA INFORMATION. Not applicable. ITEM 14. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED (a) SOLICITATIONS OR RECOMMENDATIONS. The information set forth under the caption "THE SPECIAL MEETING - Solicitation of Proxies" in the Proxy Statement is incorporated into this Transaction Statement by reference. (b) EMPLOYEES AND CORPORATE ASSETS. Not applicable. ITEM 15. ADDITIONAL INFORMATION (b) None. 8 ITEM 16. EXHIBITS (a)(1) Preliminary copy of Letter to Stockholders from the Chairman of the Crown Board, incorporated by reference to Schedule 14A filed by Crown with the Securities and Exchange Commission on May 15, 2000 (a)(2) Preliminary copy of Letter to Stockholders from the Chairman of the Crown Independent Committee, incorporated by reference to Schedule 14A filed by Crown with the Securities and Exchange Commission on May 15, 2000 (a)(3) Preliminary copy of Notice of Special Meeting of Stockholders, incorporated by reference to Schedule 14A filed by Crown with the Securities and Exchange Commission on May 15, 2000 (a)(4) Preliminary Proxy Statement, incorporated by reference to Schedule 14A filed by Crown with the Securities and Exchange Commission on May 15, 2000 (a)(5) Form of Proxy, incorporated by reference to an Appendix to Schedule 14A filed by Crown with the Securities and Exchange Commission on May 15, 2000 (a)(6) Annual Report of Crown for the Fiscal Year ended December 31, 1999, incorporated by reference to Form 10-K/A filed with the Securities and Exchange Commission on April 20, 2000 (a)(7) Quarterly Report of Crown for the Quarter ended March 31, 2000, incorporated by reference to Form 10-Q filed with the Securities and Exchange Commission on May 11, 2000 (b)(1) Commitment Letter dated May 15, 2000 from First Union National Bank to Rosemore Holdings (c)(1) Fairness Opinion of Credit Suisse First Boston Corporation, dated April 7, 2000 (c)(2) Credit Suisse First Boston Board Presentation received by the Crown Independent Committee at its meeting on April 7, 2000 (c)(3) Fairness Opinion of Aegis Muse Associates LLC to the Rosemore Board of Directors, dated April 7, 2000 (c)(4) Aegis Muse Associates LLC Board Presentation received by the Rosemore Special Committee at its meeting on March 6, 2000 (d)(1) Agreement and Plan of Merger, dated as of April 7, 2000, among Crown, Rosemore and RAC (incorporated herein by reference to Exhibit A to the Proxy Statement) (d)(2) Rights Agreement, dated as of February 1, 2000, between Crown and First Union National Bank, as rights agent, incorporated by reference to Exhibit 1 to the Form 8-A filed on February 3, 2000 with the Securities and Exchange Commission (d)(3) First Amendment to the Rights Agreement, dated as of April 10, 2000, between Crown and First Union National Bank, as rights agent, incorporated by reference to Exhibit 4 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 10, 2000 (f) Not applicable (g) Not applicable 9 SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Transaction Statement is true, complete and correct. ROSEMORE, INC. /s/ Edward L. Rosenberg By:__________________________________ Name: Edward L. Rosenberg Title: President and Chief Executive Officer Dated: May 15, 2000 ROSEMORE HOLDINGS, INC. /s/ Edward L. Rosenberg By:__________________________________ Name: Edward L. Rosenberg Title: President Dated: May 15, 2000 ROSEMORE ACQUISITION CORPORATION /s/ Edward L. Rosenberg By:__________________________________ Name: Edward L. Rosenberg Title: President and Chief Executive Officer Dated: May 15, 2000 CROWN CENTRAL PETROLEUM CORPORATION /s/ John E. Wheeler, Jr. By:__________________________________ Name: John E. Wheeler, Jr. Title: Executive Vice President - Chief Financial Officer Dated: May 15, 2000 10 EX-99.(B)(1) 2 EXHIBIT 99.(B)(1) - COMMITMENT LETTER EXHIBIT 99.(b)(1) [LETTERHEAD OF FIRST UNION NATIONAL BANK OF VIRGINIA] [FIRST UNION LOGO] April 1, 2000 Mr. Kenneth H. Trout Executive Vice President Rosemore Holdings, Inc. One North Charles Street Suite 2300 Baltimore, MD 21201 Re: Loan Commitment to Rosemore Holdings, Inc. Dear Ken: First Union National Bank ("First Union") is pleased to offer you a commitment to lend on the following terms and conditions: BORROWER: Rosemore Holdings, Inc. ("Borrower"). FACILITY: $125,000,000 Revolving Credit. Initial advances limited to 75% of the market value of the collateral to be held at FUNB. Defined "purpose loans" will be governed by Reg U requirements. This is an increase from the previously approved $50,000,000. PURPOSE: A) To finance working capital, investments in securities, and general corporate purposes. Investments will be principally in various oil and gas business ventures. B) To issue standby letters of credit ("SBLC") in support of Crown Central Petroleum's letter of credit needs under its credit facility with Congress Financial, up to $50MM, reserved. Congress Financial will be the beneficiary on the L/Cs. MATURITY: 364-days from closing (5/30/01). SBLC term not to exceed 1 year or 120 days beyond expiration of the line - no auto-renew provision in the SBLC. COLLATERAL: First perfected lien on restricted custody accounts in First Union's trust department (DTC-registered) that holds certain publicly traded shares (as listed in Annex A) owned by Borrower. MARGIN CALL: Advances for L/Cs under the facility will be governed by a 75% advance on the stock held at First Union, with margin calls at anything above 75% LTV, subject to a 5-day cure period. The stock will be valued on a daily basis by Portfolio Management when L/Cs are outstanding. Initially, 1,700,000 shares will be held in the collateral account. 1 Advances for acquisitions/purpose loans under the facility will be governed by a 50% initial advance on the stock held at FUNB, with margin calls at an 85% LTV, subject to a 5-day cure period. The loan may be remargined at 50% when new advances are made for this purpose. GUARANTOR: Rosemore, Inc. (parent company to Borrower) PRICING: Borrower's Option A. Rate: Libor Market Index Rate, as that rate may change from day to day, plus the number of basis points set forth in Annex B. "LIBOR Market Index Rate", for any day, is the rate (rounded to the next higher 1/100 of 1%) for 1 month U.S. dollar deposits as reported on Telerate page 3750 as of 11:00 a.m., London time, for such day, provided, if such day is not a London business day, the immediately preceding London business day (or if not so reported, then as determined by Bank from another recognized source or interbank quotation). The LIBOR Market Index Rate should not be confused with traditional LIBOR pricing. The LIBOR Market Index Rate functions similarly to Prime pricing; that is, LIBOR is acting as an index that may be adjusted daily and is not fixed for 1, 3 or 6 month intervals. However, since the index is based on 1 month LIBOR, it may provide a lower rate of interest to the Borrower than an index tied to the Bank's Prime. B. The interest rate will be 1-month LIBOR plus the number of basis points set forth in Annex B. "LIBOR" is the rate for U.S. dollar deposits of that many months maturity as reported on Telerate page 3750 as of 11:00 a.m., London time, on the second London business day before the relevant interest period begins (or if not so reported, then as determined by the Bank from another recognized Bank or interbank quotation). Addditional Fees. The upfront fee, the unused fee and the L/C fee are set forth in Annex C. FINANCIAL STATEMENTS: Annual Financial Statements. The Borrower will deliver to First Union, within 120 days after the close of each fiscal year, audited financial statements reflecting its operations during such fiscal year, including, without limitation, a balance sheet, profit and loss statement and statement of cash flow, with supporting schedules; all on a consolidated and consolidating basis and in reasonable detail, prepared in conformity with generally accepted accounting principles, applied on a consistent basis with that of the preceding year. Periodic Financial Statements. The Borrower will also provide unaudited management-prepared quarterly financial statements, including, without limitation, a balance sheet, profit and loss statement, and statement of cash flows, with supporting schedules. Such statements will be provided to First Union within 60 days after the end of each quarter and will be on a consolidating and consolidated basis as applicable. COVENANTS: Cross-default to $1.5MM RC w/Rosemore, Inc. and other debt greater than $1.5MM. DOCUMENTS: The loan will be evidenced by documents prepared by outside counsel engaged by First Union National Bank. COSTS: Borrower will pay all costs, expenses and fees associated with this transaction. First Union's attorneys' fees will generally be based on the time and labor required, the novelty and difficulty of the questions raised by the transaction contemplated hereunder, the skill required to perform the services, the customary fee charged for similar services, and the time limitations imposed for performance. The preceding terms and conditions are not exhaustive, and this commitment is subject to certain other terms and closing conditions customarily required by First Union for similar transactions. First Union may be referred to as "Bank" in this commitment letter and other related documents. This commitment will expire unless it is closed on or before May 30, 2000. This commitment letter shall not survive closing. Borrower represents and agrees that all financial statements and other information delivered to First Union are correct and complete. No material adverse change may occur in, nor may any adverse circumstance be discovered as to, the business or financial condition of the Borrower prior to closing. First Union's obligations under this commitment are conditioned on the fulfillment to First Union's sole satisfaction of each term and condition referenced by this commitment. This commitment supersedes all prior commitments and proposals with respect to this transaction, whether written or oral, including any previous loan proposals made by First Union or anyone acting with its authorization. No modification shall be valid unless made in writing and signed by an authorized officer of First Union. This commitment is not assignable, and no party other than Borrower shall be entitled to rely on this commitment. Please indicate your acceptance of this offer and the terms and conditions contained herein by signing below and returning one executed copy of this commitment letter to the undersigned. This offer of commitment shall expire unless the acceptance is received by the undersigned on or before May 16, 2000. CONFIDENTIALITY: This commitment letter is a confidential document between First Union and the Borrower and its representatives. It is not to be shared with any third party without prior written consent of First Union. Thank you for allowing First Union to be of service. Please do not hesitate to call me if I may be of further assistance. Sincerely, FIRST UNION NATIONAL BANK By: /s/ Eileen Iciek -------------------- Eileen Iciek Assistant Vice President Commerical Underwriting 703-760-5479 ACCEPTANCE OF LOAN COMMITMENT: The above commitment is agreed to and accepted on the terms and conditions provided in this letter. Rosemore Holdings, Inc. By: /s/ Kenneth H. Trout May 15, 2000 ------------------------- ------------ Kenneth H. Trout Date Executive Vice President 3 EX-99.(C)(1) 3 EXHIBIT 99.(C)(1) - FAIRNESS OPINION - CFSB EXHIBIT 99.(c)(1) April 7, 2000 Board of Directors Crown Central Petroleum Corporation One North Charles Street Baltimore, MD 21203 Members of the Board: You have asked us to advise you with respect to the fairness from a financial point of view to the stockholders of Crown Central Petroleum Corporation (the "Company" or "you"), other than Rosemore, Inc. ("Rosemore") and its affiliates, of the aggregate consideration to be received by such stockholders pursuant to the terms of the Agreement and Plan of Merger dated as of April 7, 2000 (the "Merger Agreement") among the Company, Rosemore and Rosemore Acquisition Corporation ("Merger Sub"). The Merger Agreement provides for the merger (the "Merger") of Merger Sub with and into the Company pursuant to which the Company will become an indirect wholly owned subsidiary of Rosemore and each outstanding share of Class A Common Stock and Class B Common Stock of the Company, par value $5.00 per share, other than shares owned by the Company, Rosemore or any of their direct or wholly owned subsidiaries, will be converted into the right to receive $9.50 per share in cash. In arriving at our opinion, we have reviewed certain business and financial information relating to the Company, as well as the Merger Agreement. We have also reviewed certain other information, including financial forecasts, provided to us by the Company and have met with the Company's management to discuss the business and prospects of the Company. We have also considered certain financial and stock market data of the Company, and we have compared that data with similar data for publicly held companies in businesses similar to the Company and we have considered the financial terms of certain other business combinations and other transactions which have recently been effected. We also considered such other information, financial studies, analyses and investigations and financial, economic and market criteria which we deemed relevant. In connection with our review, we have not assumed any responsibility for independent verification of any of the foregoing information and have relied on its being complete and accurate in all material respects. With respect to the financial forecasts, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the Company's management as to the future financial performance of the Company. In addition, we have not been requested to make, and have not made, an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Company, nor have we been furnished with any such evaluations or appraisals. Our opinion is necessarily based upon financial, economic, market and other conditions as they exist and can be evaluated on the date hereof. In connection with our engagement, we approached third parties to solicit indications of interest in acquiring all or significant assets of the Company and held preliminary discussions with certain of these parties prior to the date hereof. We have acted as financial advisor to the Company in connection with the Merger and will receive a fee for our services, a significant portion of which is contingent upon the consummation of the Merger. In the past, we have performed certain investment banking services unrelated to the Merger for the Company, and have received customary fees for such services. In the ordinary course of our business, we and our affiliates may actively trade the equity and debt securities of the Company for our and such affiliates' own accounts and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities. It is understood that this letter is for the information of the Board of Directors of the Company (including members of the Independent Committee thereof) in connection with its consideration of the Merger, does not address the allocation of the aggregate consideration to be received by the stockholders of the Company between the Class A Common Stock and Class B Common Stock and does not constitute a recommendation as to how any stockholder should vote with respect to any matter relating to the Merger. It is understood that any written advice or opinion of CSFB may be disclosed, to the extent required by applicable law, in any communication to your stockholders or in any filing with the Securities and Exchange Commission, or to the extent required to be disclosed pursuant to judicial or regulatory order, provided that, in each such instance, CSFB has been promptly advised by the Company as to such requirement and has been given reasonable opportunity to review the proposed disclosure and to comment upon any CSFB-related reference in any such communication, filing or disclosure. Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the aggregate consideration to be received by the stockholders of the Company in the Merger is fair to such stockholders, other than Rosemore and its affiliates, from a financial point of view. Very truly yours, CREDIT SUISSE FIRST BOSTON CORPORATION By: /s/ William C. Sharpstone -------------------------------- William C. Sharpstone Managing Director EX-99.(C)(2) 4 EXHIBIT 99.(C)(2) - BOARD PRESENTATION - CFSB Exhibit 99.(c)(2) April 7, 2000 CONFIDENTIAL Materials Prepared for Discussion [Crown Logo] Crown Central Petroleum Corporation SOURCE: CSFB Independent Committee Presentation, April 7, 2000 CONFIDENTIAL 1 - -------------------------------------------------------------------------------- Crown Central Petroleum Corporation Table of Contents - -------------------------------------------------------------------------------- Review of Process Since January 2000 Board Meeting Review Proposals CONFIDENTIAL 1 - -------------------------------------------------------------------------------- Crown Central Petroleum Corporation Review of Process Since January 2000 Board Meeting - -------------------------------------------------------------------------------- January 26 CSFB met with independent Board of Directors and was directed to pursue the following: Pursue corporate transaction with Rosemore. Explore the acquisition of Independent Marketer. Pursue sale of wholesale assets to Pipeline and Terminal Company. Explore the possibility of refinancing high yield debt with mortgage financing. January to CSFB has sent information to Rosemore's advisors, held February numerous calls, meetings and data room/site visits. February Pipeline and Terminal Company remains interested in wholesale. Recently submitted mark-up of purchase and sale agreement. Currently being reviewed by McGuire, Woods, Battle & Boothe and CSFB. February 11 CSFB met with Independent Marketer and two members of the Independent Board of Directors to explore merger possibility. o Independent Marketer reviewed its business and discussed synergies. February 15 Discussed Crown's cost cutting estimates with Rosemore's advisors. February 18 Update call with Independent Board of Directors to review process. CONFIDENTIAL 2 - -------------------------------------------------------------------------------- Crown Central Petroleum Corporation Review of Process Since January 2000 Board Meeting - -------------------------------------------------------------------------------- February 22 Received indication from Rosemore's advisors of potential offer. Independent Marketer's advisors relayed Independent Marketer's continued interest if Crown could control Newco, Debt would not be triggered and refineries could be sold. February 27 Met with Rosemore's advisors. Specifically told Rosemore's advisors that verbal indication of value was not adequate and asked to receive Rosemore's approval to make an acquisition proposal to Independent Marketer. February 29 At the request of Rosemore and under the Confidentiality Agreement (C.A.) Crown executed with Independent Marketer, CSFB provided information on Independent Marketer to Rosemore advisors. March 6 Received offer of $8.35 per share in cash from Rosemore. Verbally received indication that Rosemore would not approve a Independent Marketer transaction. March 8 Received conditional offer from privately owned Olympic Resources Limited. Olympic currently unwilling to provide information on its company or financing. March 9 Received offer of $9.20 per share in cash from Apex Oil. Offer contingent on due diligence, refinancing of long- term debt and ability to terminate transaction at will. Still negotiating C.A. with Apex. CONFIDENTIAL 3 - -------------------------------------------------------------------------------- Crown Central Petroleum Corporation Review of Process Since January Board Meeting (Cont'd) - -------------------------------------------------------------------------------- March 14 Discussed with Board Status of Process: Status of Rosemore and Apex Offer Revised Value of Crown March 15 Non-U.S. Oil Company, who signed a C.A. on February 14th, submitted a tentative offer to purchase Crown at price above current offer. Conditioned on 45-60 days of due diligence CSFB asked Non-U.S. Oil Company to enter Data Room quickly to start work and that 45 days was too long of a due diligence period. Non-U.S. Oil Company's primary interest appears to be retail and real estate March 22 CSFB informed Non-U.S. Oil Company that they need to start due diligence by Friday, March 24 to be in a position to be competitive. Week of Apex still unwilling to sign C.A. and unwilling or unable March 13th to have advisor Bear Stearns meet with CSFB to discuss and 20th proposal. March 24 Sent letter to Rosemore, Apex and Non-U.S. Oil Company to send in best and final offers for Crown on Wednesday, March 29th at 4:30p.m. CONFIDENTIAL 4 - -------------------------------------------------------------------------------- Crown Central Petroleum Corporation Review of Process Since January Board Meeting (Cont'd) - -------------------------------------------------------------------------------- March 27 Received call from Non-U.S. Oil Company. Non-U.S. Oil Company plans to meet with its Board later this week to receive approval to spend money on due diligence. Still see value in $10 range but need 5 weeks to conclude due diligence. March 29 Received offer of $9.35 per share in cash from Rosemore. Apex reconfirmed its $9.20 all cash offer and proposed two additional alternatives. Proposed a stock for stock offer that would value Crown at $10.00 per share and also proposed a private placement of 3.5 to 4.5 mm shares at $9.50 per share. Both additional offers include shortfall distribution provisions. Two of the Apex offers are subject to additional due diligence and all three offers are contingent on refinancing Crown's High Yield debt. Apex has not yet received a commitment for such refinancing. March 30 Discussed with Board status of process: Status of Rosemore and Apex Offers Reviewed Value of Crown CSFB contacted Apex's counsel to review offer. CSFB requested a higher cash offer with no conditions. Novelly still unwilling to sign a C.A. March 31 Discussed status of process with Board. April 6 Received call from Apex. Willing to sign C.A. with standstill, but conditional on a guaranteed 30 day due diligence period. CONFIDENTIAL 5 - -------------------------------------------------------------------------------- Crown Central Petroleum Corporation Valuation of Crown - --------------------------------------------------------------------------------
(Dollars in Millions) ------------------------------------------------------------------------------------------------- DISCOUNTED COMPARABLE COMPARABLE CASH FLOW/(1)/ ACQUISITION COMPANIES ------------------------------------------------------------------------------------------------------------ Pasadena $ 70 - $ 87 $ 60 - $ 80 $ 67 - $ 85 Tyler 30 - 38 30 - 40 25 - 35 Retail 132 - 158 130 - 140 130 - 145 Wholesale 18 - 20 10 - 15 15 - 20 -------------------- ------------------- -------------------- Total Operating Segments $ 250 - $ 303 $ 230 - $ 275 $ 237 - $285 Less Corporate Overhead (111) - (129) (111) - (129) (111) - (129) -------------------- ------------------- -------------------- Total Enterprise Value $ 139 - $ 174 $ 119 - $ 146 $ 126 - $156 Plus NPV of NOL (Base Case) 31 - 33 31 - 33 31 - 33 Corporate Adj. (12/31/99)/(2)/ (117) (117) (117) ------------------- ------------------- -------------------- Equity Value $ 53 - $ 90 $ 33 - $ 62 $ 40 - $ 72 Per Share Value/(3)/ $ 5.30 - $ 9.00 $ 3.30 - $ 6.20 $ 4.00 - $ 7.20 ------------------------------------------------------------------------------------------------------------
(1) Represents Base Case. (2) Total Debt less Cash and Equivalents. (3) Assumes 4.8 million Class A and 5.2 million Class B shares outstanding as of January, 2000. CONFIDENTIAL 6 - -------------------------------------------------------------------------------- Crown Central Petroleum Corporation Discounted Cash Flow Analysis of Crown - --------------------------------------------------------------------------------
(Dollars in Millions) ---------------------------------------------------------------------------------------------------------- DOWNSIDE BASE UPSIDE -------------------------------------------------------------------------------------------------------------- Pasadena/(1)/ $ 54 - $ 69 $ 70 - $ 87 $ 75 - $ 90 Tyler/(1)/ 23 - 30 30 - 38 36 - 43 Retail/(2)/ 103 - 123 132 - 158 140 - 170 Wholesale/(3)/ 15 - 16 18 - 20 19 - 21 ---------------- --------------- -------------------- Total Operating Segments $ 195 - $238 $ 250 - $303 $ 270 - $ 324 Less Corporate Overhead/(4)/ (111) - (124) (111) - (129) (118) - (138) ---------------- --------------- -------------------- Total Enterprise Value $ 84 - $114 $ 139 - $174 $ 152 - $186 Plus NPV of NOL 33 - 35 31 - 33 36 - 38 Corporate Adjustments (12/31)/(5)/ (117) (117) (117) ---------------- --------------- -------------------- Equity Value $ 0 - $ 32 $ 53 - $ 90 $ 71 - $107 Value Per Share/(6)/ $ 0 - $ 3.20 $5.30 - $ 9.00 $ 7.10 - $ 10.70 ---------------------------------------------------------------------------------------------------------------
(1) Low end based on 12% discount rate and 5.0x EBITDA terminal value; High end based on 11% discount rate and 6.0x EBITDA terminal value. (2) Low end based on 11% discount rate and 6.0x EBITDA terminal value; High end based on 10% discount rate and 7.0x EBITDA terminal value. (3) Low end based on 12% discount rate and 3.0x EBITDA terminal value; High end based on 11% discount rate and 3.5x EBITDA terminal value. (4) Low end based on 11% discount rate and 4.0x EBITDA terminal value; High end based on 10% discount rate and 5.0x EBITDA terminal value. (5) Total debt less cash and equivalents. (6) Assumes 4.8 million Class A and 5.2 million Class B shares outstanding as of January 2000. CONFIDENTIAL 7 - -------------------------------------------------------------------------------- Crown Central Petroleum Corporation Discounted Cash Flow Analysis - Assumptions - -------------------------------------------------------------------------------- Valued Crown as of 1/1/2000. Assumed 2000 Plan for all cases, 2.5% inflation post 2000 and Statoil Agreement to end in October 2000.
Downside Case Base Case Upside Case - ------------------------------------ --------------------------------------- --------------------------------------- Refining Refining Refining . $2.68 in 2000 (Crown Plan) . $2.73 in 2000 (Crown Plan with . CSFB's estimates for Gulf Coast - Also represents a 3 year average adjusted margins) Margin ($/BBL) . .5% growth 2001-2004 1% growth 2001 - 2004 $2.68 in 2000 (Crown Plan) $3.00 in 2001 $3.45 in 2002 $2.96 in 2003 $2.86 in 2004 Retail Retail Retail . 10.6 cpg gasoline margin in . 10.6 cpg gasoline margin in . 10.6 cpg gasoline margin in 2000 (Crown Plan) 2000 (Crown Plan) 2000 (Crown Plan) Negative 1.5% growth in 2001 - 1% growth in 2001 - 2004 2% growth in 2001 - 2004 2004 . 3% p.a. gasoline volume growth . 3% p.a. gasoline volume growth . 3% p.a. gasoline volume growth . 3% p.a. merchandise sales . 3.5% p.a. merchandise sales . 5% p.a. merchandise sales growth growth growth - ------------------------------------ --------------------------------------- ---------------------------------------
CONFIDENTIAL 8 - -------------------------------------------------------------------------------- Crown Central Petroleum Corporation Summary Comparable Acquisition Analysis - --------------------------------------------------------------------------------
(Dollars in Millions) - ----------------------------------------------------------------------------------------------------------------------- PARAMETER DATA MULTIPLE RANGE ENTERPRISE VALUE REFERENCE RANGE - ----------------------------------------------------------------------------------------------------------------------- Pasadena 1999 EBITDA $(20.4) 4.0x - 5.0x NM - NM 3Y Avg. EBITDA $ 9.4 4.0x - 5.0x $37.6 - $47.0 --------------- 1999 Capacity (MB/D) 100 $700 - $1,000 $70.0 - $100.0 $60 - $80 --------------- Tyler 1999 EBITDA $ (1.0) 3.0x - 4.0x NM - NM 3Y Avg. EBITDA $ 1.9 3.0x - 4.0x $5.7 - $7.6 --------------- 1999 Capacity (MB/D) 52 $600 - $900 $31.2 - $46.8 $30 - $40 --------------- Retail 1999 EBITDA $ 15.9 6.0x - 7.0x $95.4 - $111.3 3Y Avg. EBITDA $ 22.0 6.0x - 7.0x $132.0 - $154.0 ---------------- Number of Stations 331 $450,000 - $500,000 $148.9 - $165.5 $130 - $140 ---------------- Wholesale (Colonial/Plantation) ---------------- Total Capacity (MMBBL) 1.18 $9.0 - $15.0 $10.6 - $17.7 $10 - $15 ---------------- Less Corporate Overhead (111) - $(129) -------------------------------------------------- Enterprise Value Reference Range $119 - $146 -------------------------------------------------- Plus NPV of NOL (Base Case) $31 - $33 Corporate Adjustments (12/31) $(117) -------------------------------------------------- Equity Value Reference Range $33 - $62 -------------------------------------------------- Per Share Value Reference Range $3.30 - $6.20 -------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------
CONFIDENTIAL 9 - ----------------------------------------------------------------------------------------------------------------------------------- Crown Central Petroleum Corporation Selected Comparable Acquisitions - ----------------------------------------------------------------------------------------------------------------------------------- Refining Comparable Acquisitions - ----------------------------------------------------------------------------------------------------------------------------------- PURCHASE PRICE/ PURCHASE NELSON NELSON ---------------------------------------- DATE BUYER SELLER PRICE (MM) CAPACITY COMPLEXITY CAPACITY CAPACITY NELSON CAPACITY EBITDA - ----------------------------------------------------------------------------------------------------------------------------------- 6/99 Frontier Oil Equilon $170 109,000 10.6 1,155 1,560 $147 NA 7/98 Clark USA BP-Lima $175 170,000 7.2 1,224 1,029 $143 NA 5/98 Valero Mobil-Paulsboro $228 155,000 11.2 1,736 1,471 $131 3.0x 3/97 Valero Basis Petroleum $285 260,100 11.4 2,965 1,096 $ 96 4.7x 8/89 Crown Central La Gloria Oil & Gas $ 71 55,000 8.5 468 1,291 $150 3.5x - ----------------------------------------------------------------------------------------------------------------------------------- Retail Comparable Acquisitions - ----------------------------------------------------------------------------------------------------------------------------------- PURCHASE PRICE/ PURCHASE ------------------------- DATE BUYER SELLER PRICE (MM) STORE COUNT LOCATION STORE COUNT EBITDA - ------------------------------------------------------------------------------------------------------------------------------------ 12/99 Tosco Exxon Mobil $860 1,740 Northeast $494 5.7x 12/99 Ultramar Diamond Various (1) $ 59 217 Southeast $271 NA 5/99 Clark USA Apollo $255 671 Midwest $380 6.5x 7/98 E-Z Serve Corp. EBC Texas Acquisition Corp. $106 494 LA, FL, GA, AL, NC, TX $215 NA 2/96 Tosco Corp. Circle K $900 2,387 Southeast/West $377 6.6x - ------------------------------------------------------------------------------------------------------------------------------------ (1) Figures represent aggregate numbers for both transactions of 1999. Wholesale Comparable Acquisitions - ------------------------------------------------------------------------------------------------------------------------------------ PURCHASE STORAGE PURCHASE PRICE CAPACITY PRICE/ DATE BUYER SELLER LOCATION ($MM) # TERML (MMBBL) CAPACITY - ----------------------------------------------------------------------------------------------------------------------------------- 12/99 Equilon Motiva Clark USA IL, IN, MI, MO, OH, TX, WI $35.0 15 4.32 $ 8.09 12/98 Transmontaigne Sunoco Rensselaer, NY $ 5.4 1 0.51 $10.55 6/98 Transmontaigne ITAPCO Various $32.0 17 3.30 $ 9.70 6/95 International Dunraine Petroleum Fuel & Terml. St. Louis, MO / Granite City, IL $23.2 2 1.20 $19.33 4/95 Giant Industries Texaco Albuquerque, NM $ 1.4 1 0.15 $ 9.33 - -----------------------------------------------------------------------------------------------------------------------------------
CONFIDENTIAL 10 - ---------------------------------------------------------------------------------------------------------- Crown Central Petroleum Corporation Summary Comparable Company Analysis - ---------------------------------------------------------------------------------------------------------- (Dollars in Millions) - ---------------------------------------------------------------------------------------------------------- Parameter Data Multiple Range Enterprise Value REFERENCE RANGE - ---------------------------------------------------------------------------------------------------------- Pasadena 2000E EBITDA(1) $ 34.4 3.5x - 4.5x $120.4 - $154.8 1999 EBITDA $(24.0) 4.5x - 5.5x NM - NM 3Y Avg. EBITDA $ 9.4 4.5x - 5.5x $ 42.3 - $51.7 $ 67 - $85 Tyler 2000E EBITDA(1) $ 14.6 3.0x - 4.0x $ 43.8 - $58.4 1999 EBITDA $ (1.0) 3.5x - 4.5x NM - NM 3Y Avg. EBITDA $ 1.9 3.5x - 4.5x $ 6.7 - $8.6 $ 25 - $35 Retail 2000E EBITDA(1) $ 25.6 6.0x - 7.0x $153.6 - $179.2 1999 EBITDA $ 16.4(2) 6.5x - 7.5x $106.6 - $123.0 3Y Avg. EBITDA $ 22.0 6.5x - 7.5x $143.0 - $165.0 $ 130 - $145 Wholesale 2000E EBITDA(1) $ 4.9 3.0x - 4.0x $ 14.7 - $19.6 1999 EBITDA $ 27.6 3.0x - 4.0x NM - NM 3Y Avg. EBITDA $ 7.6 3.0x - 4.0x $ 22.8 - $30.4 $ 15 - $20 Less Corporate Overhead $(111) - $(129) Enterprise Value Reference Range $126 - $156 Plus NPV of NOL (Base Case) $ 31 - $33 Corporate Adjustments (12/31) $ (117) Equity Value Reference Range $ 40 - $72 Per Share Value Reference Range $4.00 - $7.20 - ----------------------------------------------------------------------------------------------------------
(1) Based on Base Case. (2) Excludes gain from sale of Atlanta retail stores.
CONFIDENTIAL 11 - ---------------------------------------------------------------------------------------------------------------------- Crown Central Petroleum Corporation Selected Comparable Companies - ---------------------------------------------------------------------------------------------------------------------- Refining (Dollars in Millions, Except Per Share Data) - ---------------------------------------------------------------------------------------------------------------------- AMV/EBITDA MARKET CAPITALIZATION MARKET ENTERPRISE ---------- ------------------------------------------- COMPANY VALUE ($MM) VALUE ($MM) 2000 2001 2000CF 2001CF 2000NI 2001NI BOOK VALUE - ---------------------------------------------------------------------------------------------------------------------- Giant $ 81.2 $ 306.8 NA NA NA NA 8.5x 8.5x 0.6x Holly 82.5 141.7 NA NA NA NA NA NA 0.7x Sunoco 2,335.9 3,277.9 4.5x 3.9x 4.5x 3.9x 9.5x 7.4x 1.6x Tosco 4,360.5 6,038.7 4.8x 4.3x 5.9x 5.3x 10.4x 8.7x 2.1x Ultramar Diamond Shamrock 2,084.3 3,533.1 4.9x 4.4x 4.6x 4.1x 9.1x 7.5x 1.4x Valero Energy 1,780.1 3,370.5 6.0x 4.8x 4.7x 3.9x 9.0x 7.4x 1.6x -------------------------------------------------------- Average 1,787.4 2,778.1 5.1x 4.4x 4.9x 4.3x 9.3x 7.9x 1.3x Median 1,932.2 3,324.2 4.9x 4.4x 4.7x 4.0x 9.1x 7.5x 1.5x -------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Note: Prices as of April 6, 2000. First Call estimates. Retail (Dollars in Millions, Except Per Share Data) - --------------------------------------------------------------------------------------------------------------------- AMV/EBITDA MARKET CAPITALIZATION MARKET ENTERPRISE ---------- ------------------------------------------ COMPANY VALUE ($MM) VALUE ($MM) 2000 2001 2000CF 2001CF 2000NI 2001NI BOOK VALUE - --------------------------------------------------------------------------------------------------------------------- Casey's $ 531.1 $ 705.4 6.8x 5.5x 7.9x 6.0x 15.4x 10.9x 1.7x 7-Eleven 1,543.0 4,141.9 9.9x 9.5x 6.7x 6.0x 19.7x 17.0x NM Pantry 159.6 695.2 5.7x 5.2x 2.3x 2.2x 8.6x 6.5x 1.5x -------------------------------------------------------- Average 744.6 1,847.5 7.5x 6.7x 5.6x 4.7x 14.6x 11.5x 1.6x Median 531.1 705.4 6.8x 5.5x 6.7x 6.0x 15.4x 10.9x 1.6x -------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------
Note: Prices as of April 6, 2000. First Call estimates. EX-99.(C)(3) 5 EXHIBIT 99.(C)(3) - FAIRNESS OPINION - AEGIS MUSE Exhibit 99.(c)(3) [AEGIS MUSE'S LETTERHEAD] April 7, 2000 Board of Directors Rosemore, Inc. One N. Charles Street Suite 2300 Baltimore, MD 21201 Dear Members of the Board of Directors: Rosemore, Inc. ("Rosemore") and Crown Central Petroleum Corporation ("Crown") will enter into an Agreement and Plan of Merger dated as of April 7, 2000 (the "Merger Agreement") pursuant to which Rosemore will acquire for a price of $9.50 per share all of the issued and outstanding Class A and Class B common stock of Crown held by stockholders other than Rosemore (the "Merger"). The Merger will be effected by having Rosemore Acquisition Corporation ("RAC"), a newly formed subsidiary of Rosemore, merge with and into Crown. Crown will be the surviving corporation in the Merger and will become a wholly owned subsidiary of Rosemore. You have asked us whether, in our opinion, the proposed consideration to be paid by Rosemore in the Merger is fair to Rosemore from a financial point of view. This letter confirms our oral opinion previously delivered to you: In arriving at the opinion set forth below, we have, among other things: 1. Reviewed Crown's Annual Reports, Forms 10-K and related financial information for the three fiscal years ended December 31, 2000; 2. Reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets and prospects of Crown, furnished to us by Crown; 3. Conducted discussions with members of senior management of Crown and Rosemore concerning Crown's business and prospects; 4. Reviewed the historical market prices and trading activity for Crown Common Stock and compared them with those of certain publicly traded companies which we deemed to be similar to Crown; 5. Compared the results of operations of Crown with those of certain companies which we deemed to be reasonably similar to Crown; 6. Compared the proposed financial terms of the Merger with the financial terms of certain other mergers and acquisitions which we deemed to be relevant; 7. Reviewed the Merger Agreement; and 8. Reviewed such other financial studies and analyses and performed such other investigations and took into account such other matters as we deemed necessary. In addition, Aegis Muse relied upon its own experience and judgment in projecting revenues and gross margins. Operating expenses were typically based on Crown's historical performance, and estimates of future capital expenditures were based both on Aegis Muse's own estimates of amounts needed to be spent to comply with existing and anticipated environmental regulations as well as Crown's own projections for sustaining capital. In preparing our opinion, we have relied on the accuracy and completeness of all information supplied or otherwise made available to us by Crown, and we have not independently verified such information or undertaken an independent appraisal, evaluation or actuarial evaluation of the assets or liabilities of the Crown. With respect to the financial forecasts and estimates of future overhead reductions furnished to us by Crown, we have assumed that they have been reasonably prepared and reflect the best currently available estimates and Page 2 judgement of Crown's management as to the expected future financial performance of Crown. Our opinion is based upon general economic, market, monetary and other conditions as they exist and can be evaluated, and the information made available to us, as of the date hereof. This opinion is addressed to the Board of Directors of Rosemore and does not constitute a recommendation to any shareholders as to how such shareholders should vote on the proposed Merger. Aegis Muse Associates, LLC, as part of its strategic advisory business, is continually engaged in the valuation of refining and marketing businesses and their securities in connection with mergers and acquisitions. We have acted as financial advisor to Rosemore in connection with the Merger and will receive a fee for our services, a significant portion of which is contingent upon consummation of the Merger. We have, in the past through our affiliate, Muse Stancil & Company, provided consulting services to Crown and have received fees for rendering such services. We may continue to provide advisory and consulting services to Rosemore or Crown, and receive fees for rendering such services. Such continuing financing services may include, without limitation, financing in connection with the Merger. On the basis of, and subject to the foregoing, we are of the opinion that the proposed consideration to be paid by Rosemore to the holders of Crown Stock in the Merger is fair to Rosemore (other than to Rosemore's shareholders or affiliates) from a financial point of view. Very truly yours, AEGIS MUSE ASSOCIATES, LLC By: /s/ Garfield L. Miller ------------------------- Garfield L. Miller, III EX-99.(C)(4) 6 EXHIBIT 99.(C)(4) - BOARD PRESENTATION - AEGIS MUSE Exhibit 99.(c)(4) CONFIDENTIAL Crown Central Petroleum Corporation Discounted Cash Flow Valuation prepared for Rosemore, Inc. [CROWN LOGO] March 6, 2000 AEGIS MUSE ASSOCIATES, L.L.C. 100 McKinney Place Carnegie Hall Tower 7600 West Tidwell 3131 McKinney Avenue 152 West 57 St, 29th Floor Suite 709 Dallas, Texas 75204 New York, NY 10019 Houston, Texas 77040 Phone (214) 954-4455 Phone (212) 245-2552 Phone (713) 460-8162 Fax (214) 954-1521 Fax (212) 582-0386 Fax (713) 460-1117 Contents --------------------- Contents ================================================================================ 1 Crown Central Petroleum's Assets _________________________________ 3 2 Current Status ___________________________________________________ 4 3 Methodology & Assumptions ________________________________________ 8 4 Aegis Muse Reference Value _______________________________________ 17 5 Segment Synopsis _________________________________________________ 19 6 Valuation Summary ________________________________________________ 30 - Expected Case: Continue Refining ______________________________ 30 - Expected Case: Exit Refining __________________________________ 32 - Downside Case: Continue Refining ______________________________ 34 - Downside Case: Exit Refining __________________________________ 36 - Upside Case: Continue Refining ________________________________ 38 - Upside Case: Exit Refining ____________________________________ 40 7 Expected Case Segment Detail _____________________________________ 42 - Retail Marketing ______________________________________________ 42 - Pasadena Refinery _____________________________________________ 44 - Tyler Refinery ________________________________________________ 56 - Product Terminals _____________________________________________ 62 2 Crown Assets ------------------- Crown Central Petroleum Assets ================================================================================ [Map showing Crown's Product Terminals, Refineries, Retail Stations and certain common carrier pipelines] 3 Current Status --------------------- Current Status ================================================================================ [X] Rosemore's Investment in Crown - 2,401,232 Shares Class A* - 917,288 Shares Class B* - Total Value at Current Market (close 3/09/2000) = $21,698,543 [X] Rosemore's Ownership - 49.8% of Crown Class A - 17.5% of Crown Class B - 46.7% voting interest * per latest 13D filings 4 Current Status -------------- Current Status (Cont'd) ================================================================================ Crown Shares trading at historic low (Amounts in dollars) Mar-92 24.02 Apr-92 22.5 May-92 22.88 Jun-92 20.38 Jul-92 17.75 Aug-92 16.75 Sep-92 16.38 Oct-92 14.88 Nov-92 15.25 Dec-92 13.63 Jan-93 16 Feb-93 16.13 Mar-93 15.5 Apr-93 14.63 May-93 16.38 Jun-93 15.13 Jul-93 16.5 Aug-93 15.13 Sep-93 14.75 Oct-93 15.75 Nov-93 14.63 Dec-93 15.25 Jan-94 17.38 Feb-94 18.25 Mar-94 20.5 Apr-94 23 May-94 18.63 Jun-94 17.88 Jul-94 17.38 Aug-94 19 Sep-94 17.75 Oct-94 17 Nov-94 15 Dec-94 12.75 Jan-95 13.5 Feb-95 13.5 Mar-95 13.88 Apr-95 15 May-95 16.75 Jun-95 15.13 Jul-95 16.5 Aug-95 16 Sep-95 15.88 Oct-95 15 Nov-95 14.13 Dec-95 14.75 Jan-96 18 Feb-96 17.88 Mar-96 18 Apr-96 19.38 May-96 17.25 Jun-96 15.13 Jul-96 14.38 Aug-96 14 Sep-96 13.88 Oct-96 13.63 Nov-96 14.25 Dec-96 12.38 Jan-97 12.75 Feb-97 13.13 Mar-97 12.25 Apr-97 12.63 May-97 13.38 Jun-97 14.63 Jul-97 19.56 Aug-97 20 Sep-97 19.63 Oct-97 19.88 Nov-97 20.13 Dec-97 21.88 Jan-98 20.69 Feb-98 18.63 Mar-98 18.75 Apr-98 14.88 May-98 14.69 Jun-98 12.56 Jul-98 11.75 Aug-98 10.31 Sep-98 10.38 Oct-98 9 Nov-98 9.19 Dec-98 7.13 Jan-99 7.94 Feb-99 8.25 Mar-99 7.06 Apr-99 8.5 May-99 8.13 Jun-99 11.88 Jul-99 8.63 Aug-99 7.75 Sep-99 6 Oct-99 5.25 Nov-99 6.5 Dec-99 5.63 Jan-00 7 Feb-00 6.25 5 Current Status -------------- Current Status (CONT'D) ================================================================================ Relative Per Share Price |X| Shares have underperformed comparables since 1/1/98 [GRAPH APPEARS HERE]
Holly Sunoco Tosco Valero UDS Crown (A) Jan-98 1 1 1 1 1 1 Feb-98 1.04 1.03 1.1 1.12 1.07 0.9 Mar-98 1.04 1.06 1.05 1.06 1.06 0.91 Apr-98 1.21 1.04 1.07 1.03 0.97 0.72 May-98 1.05 1.1 0.95 1.03 0.96 0.71 Jun-98 0.99 1 0.88 1.05 0.95 0.61 Jul-98 0.92 0.97 0.84 0.76 0.79 0.57 Aug-98 0.81 0.85 0.66 0.57 0.69 0.5 Sep-98 0.59 0.83 0.64 0.63 0.68 0.5 Oct-98 0.59 0.89 0.84 0.79 0.81 0.44 Nov-98 0.62 0.87 0.78 0.67 0.77 0.44 Dec-98 0.65 0.93 0.77 0.67 0.73 0.34 Jan-99 0.59 0.91 0.65 0.6 0.66 0.38 Feb-99 0.48 0.79 0.62 0.56 0.59 0.4 Mar-99 0.51 0.93 0.74 0.79 0.65 0.34 Apr-99 0.54 0.92 0.8 0.71 0.69 0.41 May-99 0.49 0.79 0.76 0.64 0.66 0.39 Jun-99 0.51 0.78 0.78 0.68 0.65 0.57 Jul-99 0.57 0.79 0.79 0.68 0.71 0.42 Aug-99 0.54 0.84 0.76 0.67 0.78 0.37 Sep-99 0.57 0.71 0.76 0.61 0.77 0.29 Oct-99 0.55 0.62 0.76 0.58 0.74 0.25 Nov-99 0.55 0.66 0.81 0.66 0.76 0.31 Dec-99 0.51 0.61 0.81 0.63 0.68 0.27 Jan-00 0.52 0.6 0.77 0.72 0.66 0.34 Feb-00 0.5 0.67 0.81 0.77 0.7 0.3
6 Current Status --------------------- Current Status (CONT'D) ================================================================================ [X] Illiquid market - Small public float - No equity research coverage - No institutional following [X] Company appears to derive few benefits from being public [X] Crown's Board has invited Rosemore to submit a bid for the shares Rosemore doesn't own - Credit Suisse First Boston has been soliciting offers for all of Crown or its assets for the past year - Outcome of process is not known, but Crown may have offers for some assets or a merger proposal in the form of a share exchange 7 Methodology & Assumptions ------------------------- Methodology: Discounted Cash Flow ================================================================================ [X] Segment-by-segment roll-up - Margins and volumes were projected by segment - Variable and fixed costs were deducted - Taxes and capital expenditures were deducted - Result adjusted for after-tax impact of corporate overhead and NOL - Resulting unlevered net free cash flow was discounted - Corporate debt was deducted - Result is equity value [X] Discount rate of 13% (weighted average after-tax cost of capital determined using the Capital Asset Pricing Model as applied to publicly traded independent refining & marketing companies) [X] Two alternative operating scenarios considered - Continue refining operations - Exit refining operations: exit by 2008 [X] Assumptions regarding margins, costs, volumes, and capital expenditures are based upon discussions with Crown Central's senior management and Aegis Muse's own judgments regarding industry economics and future margins 8 Methodology & Assumptions ------------------------- Issues ================================================================================ [X] Acquisition of public shares by Rosemore, Inc. would constitute a change in control for certain purposes - Limits use of NOLs for tax purposes - Triggers certain severance benefits for senior and middle management [X] Valuations predicated on achieving overhead reductions as projected by Crown Central's senior management - Estimated at $9 million per annum based on headcount reductions and replacement of existing benefits packages with lower cost packages - Aegis Muse accepts future savings as reasonable based on a detailed review with Crown Central's management and Crown Central's ability to achieve savings in calendar year 1999 - Senior Management's investigation of potential benefits savings at very preliminary stage 9 Methodology & Assumptions ------------------------- Operating Scenarios ================================================================================ [X] Continue Refining Operations - Make significant capital expenditures at both Tyler and Pasadena refineries to meet upcoming low sulfur gasoline regulations, anticipated ultra-low sulfur diesel specifications and anticipated air quality regulations at Pasadena [X] Exit Refining - Spend only the capital necessary at Pasadena refinery to operate at current levels and meet anticipated low sulfur gasoline specifications - Avoid capital spending for low sulfur diesel - Cease refining operations in 2008 when Pasadena cannot meet more stringent low sulfur diesel specifications - Convert site to terminal facility and operate as such or sell to third party - Assumes Tyler facility is sold to third party prior to Pasadena shut-down at a value equal to its net present value (24 million in the Expected Case) 10 Methodology & Assumptions ------------------------- Cases ================================================================================ [X] Three Cases run with different margin assumptions for three principal business units - Pasadena Refinery - Tyler Refinery - Gasoline Retailing [X] Terminal operating assumptions held constant for all cases - Smallest business unit - Limited variability in operations [X] Cases constitute three separate outlooks - Downside - Expected - Upside 11 Methodology & Assumptions ------------------------- Expected Case ================================================================================ [X] Represents the set of operating and economic assumptions most likely to obtain in the judgement of Aegis Muse. - Reflects a significant improvement in refining margins for five years from recently depressed levels before returning to levels representing the historic average (also higher than recently depressed levels) - Represents a return of retail gasoline margins and volumes to historical levels, reversing a recently declining trend attributed to under-investment - Gives full recognition to Crown Central's overhead reductions, employee benefits cost reductions of $2 million per annum [X] Note: The value of Crown is highly sensitive to refining margin assumptions. Refining margins are expected to remain extremely volatile in the future 12 Methodology & Assumptions ------------------------------- U.S. Refining Outlook: Near Term ================================================================================ [GRAPHIC SHOWING FACTORS CONSIDERED IN DETERMINING FUTURE MARGINS] - ---------------------------------------------------------------- ---------------------------------------------------------- Markets . Transport Markets . Market Concentration . Commodity Price Takers . Oligopoly Power . Marginal Production Economics . Marginal Production Disfavored . Little to no Price Leadership . Market Leadership - ---------------------------------------------------------------- ---------------------------------------------------------- Capacity . Utilization Overstated Capacity . Utilization near limits . Further Investment . RFG mandate repeal . Creep Accelerates . Short-term Supply Disruptions . Limited Debottlenecking - ---------------------------------------------------------------- ---------------------------------------------------------- Economy . Lower growth Economy . Unabated growth . Less depended on problem . Continued transportations growth . Increased petroleum prices . Low petroleum prices - ---------------------------------------------------------------- ---------------------------------------------------------- Demographics . Aging Baby boomers drive less Demographics . American drive until they're 80+ . Telecommuting work environments . Baby boomers' babies . Satellite offices . SUVs - ---------------------------------------------------------------- ---------------------------------------------------------- Regulation . Low Suffer Gasoline and Distillate Regulations Regulation . Regulation spurs rationalization . De-Facto Creep . Imports limited by tight clean product . Global Warning, CO\\2\\ Regulations specifications . Carbon Taxes . MTBE Phase-out - ---------------------------------------------------------------- ---------------------------------------------------------- Alternatives . Alternative transportation fuels penetrate Alternatives . No effective competition to gasoline on - Electric / LNGs near horizon - Hybrids / Fuel Cells . Natural gas further penetrates power markets - ---------------------------------------------------------------- ----------------------------------------------------------
13 Methodology & Assumptions ------------------------------- U.S. Gulf Refining Margins: Expected Case ================================================================================ (Gross Margin Per Barrel in dollars)
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 USGC Coking Gross Margin 5.84 6 4.48 4.08 3.36 3.01 3.25 4.39 4.14 3.06 Pasadena Gross Margin (Expected) 1.73 2.54 1.96 2.57 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 USGC Coking Gross Margin 3.74 4.42 4.46 4.49 4.53 4.56 4.35 4.13 3.92 3.71 Pasadena Gross Margin (Expected) 3.45 4.02 4.05 4.11 4.15 4.21 4 3.79 3.79 3.57 3.45 3.52 3.54 3.59 3.63 3.67 3.7 3.73 3.79 3.57 3.45 4.02 4.05 4.11 4.15 4.21 4.25 4.29 4.54 4.57
[X] The projected differential between U.S. Gulf Coast coking margins and Pasadena's margins decrease due principally to the expiration of the Statoil Processing Agreement and the absence of trading activity. Methodology & Assumptions ------------------------- Downside Scenario ================================================================================ [X] Represents a conservative set of operating and economic assumptions. - Reflects a modest improvement in refining margins to levels representing the historic average (higher than recently depressed levels) - Represents a return of retail gasoline margins and volumes to historical levels, reversing a recently declining trend attributed to under-investment (slightly lower margins than in the Expected Case) - Gives full recognition to Crown Central's overhead reductions, but no reductions in benefits costs 15 Methodology & Assumptions ------------------------------ Upside Scenario - -------------------------------------------------------------------------------- [X] Represents an optimistic set of operating and economic assumptions. - Reflects a significant and permanent improvement in refining margins - Represents a return of retail gasoline margins and volumes to historical levels, reversing a recently declining trend attributed to under-investment (slightly higher margins than in the Expected Case) - Gives full recognition to Crown Central's overhead reductions, including benefits cost reductions of $4 million per annum 16 Reference Value ----------------------- Aegis Muse Reference Value: $6.00 To $9.00 Per Share - -------------------------------------------------------------------------------- [X] Low end of reference value range reflects Expected Case economics under the Continue Refining Scenario [X] High end of reference value range reflects Expected Case economics under Exit Refining Scenario - Exit Refining Scenario value calculates as high as $11.00 per share were operations to continue until 2008 - AegisMuse assumes exit achieved earlier [X] Downside Case values are negative for Continue Refining Scenario [X] Upside Case economics, while possible, entail a high degree of risk and should not be viewed as a basis for investment [X] Ability to liquidate retail gasoline locations affords some downside protection ($2.00 per share assuming all locations are sold over the next two years) 17 Reference Value ------------------- Valuation Summary - -------------------------------------------------------------------------------- ($ thousands, except per share)
Operating Scenarios ------------------- Continue Refining Exit Refining Downside Expected Upside Downside Expected Upside ------------------------------------- ------------------------------------ Segment Crown Retail $ 105,416 $ 116,575 $ 127,733 $ 105,416 $ 116,575 $ 127,733 Pasadena Refinery 64,832 103,673 169,459 110,137 148,978 155,497 La Gloria Refinery 14,223 24,232 36,376 14,223 24,232 36,376 Terminals (Crown and La Gloria) 16,708 16,708 16,708 16,708 16,708 16,708 NOL (5,406) 9,397 20,158 5,556 16,413 19,767 Corporate (96,849) (85,925) (75,000) (86,835) (77,162) (67,490) --------- --------- --------- --------- --------- --------- Total Value 98,924 184,660 295,434 165,205 245,743 288,592 Debt 130,000 130,000 130,000 130,000 130,000 130,000 --------- --------- --------- --------- --------- --------- Equity Value $ (31,076) $ 54,660 $ 165,434 $ 35,205 $ 115,743 $ 158,592 Shares (thousands) 10,071 10,071 10,071 10,071 10,071 10,071 Per Share Value ($/share) $ (3.09) $ 5.43 $ 16.43 $ 3.50 $ 11.49 $ 15.75 Investment Returns - ---------------------------------------------------------------------------------------------------------------------- Equity Return @ $7.00 / share n.a. 24% 36% n.a. 42% 48% Equity Return @ $8.00 / share n.a. 20% 32% n.a. 36% 42% Equity Return @ $9.00 / share n.a. 18% 28% n.a. 32% 37% Equity Return @ $10.00 / share n.a. 16% 26% n.a. 28% 34%
[X] Equity returns assume long-term debt can be refinanced at maturity (2005) [X] Crown is unlikely to be able to refinance its long-term debt at current rates, if at all, under the downside scenarios 18 Segment Synopsis -------------------- Retail Marketing - -------------------------------------------------------------------------------- [X] Expected Case Value: $117 million [X] Competitive market conditions will continue to put pressure on fuel margins, necessitating continued investment in site improvements (e.g. card readers, pump nozzles) [X] Fuel volumes expected to return to historical values in two years [X] Sustaining capital includes expenditures for updated pump nozzles and additional card readers [X] Real estate value of retail marketing locations could significantly exceed their value as gasoline stations and/or convenience stores - Real estate liquidation case assumes all locations sold over two years - Fee locations valued at $650,000 per site; $150,000 per site for leased locations - Yields a value of $134 million after-tax, or nearly $20 million higher than the going concern value 19 Segment Synopsis ---------------- Retail Marketing Fuel Margins ================================================================================ (Cents Per Gallon) [GRAPH APPEARS HERE]
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Upside Case 10.01 9.73 10.64 8.32 11 11 11 11 11 11 11 11 11 11 Expected Case 10.01 9.73 10.64 8.32 10.5 10.5 10.5 10.5 10.5 10.5 10.5 10.5 10.5 10.5 Downside Case 10.01 9.73 10.64 8.32 10 10 10 10 10 10 10 10 10 10
20 Segment Synopsis ---------------- Retail Marketing Fuel Volumes ================================================================================ (Thousand gallons, per store per month) [GRAPH APPEARS HERE]
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Fuel Volume 113 123 130 132 129 125.99 132.77 139.72 142.1 144.51 146.97 149.47 152.01 154.59 157.22 159.89
21 Segment Synopsis ------------------------- Retail Marketing Merchandise Margins ================================================================================ (Percent of Sales) [GRAPH APPEARS HERE]
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Upside Case 26.60% 26.60% 30.60% 29.50% 0.305 0.305 0.305 0.305 0.305 0.305 0.305 0.305 0.305 0.305 Expected Case 26.60% 26.60% 30.60% 29.50% 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.31 Downside Case 26.60% 26.60% 30.60% 29.50% 0.315 0.315 0.315 0.315 0.315 0.315 0.315 0.315 0.315 0.315
22 Segment Synopsis ---------------------- Pasadena Refinery - -------------------------------------------------------------------------------- [X] Expected Case Value: $104 to $149 million (continue refining, exit refining) [X] Future performance will reflect the mature commodity nature of the business in a highly competitive environment [X] Substantial capital requirements of $250 to $300 million over the next 10 years (continue refining case): - To sustain ongoing operations (average $15 million per year) - To enable production of low sulfur gasoline ($15 million in 2002 to 2003) - To enable production of ultra-low sulfur diesel products ($100 million in 2004 to 2006) - To reduce stationary source emissions of NOx ($20 million in 2005 to 2006) - To ensure operating reliability and compliance with environmental, safety and health regulations [X] Assumes Statoil processing agreement expires under its terms in October 2000 and is not renewed 23 Segment Synopsis ---------------- Pasadena Margin Scenarios ================================================================================ Gross Margin Per Barrel (in dollars)
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 USGC Cok 5.84 6 4.48 4.08 3.36 3.01 3.25 4.39 4.14 3.06 3.74 4.42 4.46 4.49 4.53 4.56 Upside Case 1.73 2.54 1.96 2.57 3.45 4.02 4.05 4.11 4.15 4.21 Expected Case 1.73 2.54 1.96 2.57 3.45 4.02 4.05 4.11 4.15 4.21 Downside Case 1.73 2.54 1.96 2.57 3.45 3.52 3.54 3.59 3.63 3.67 2006 2007 2008 2009 USGC Cok 4.35 4.13 3.92 3.71 Upside Case 4.25 4.29 4.54 4.57 Expected Case 4 3.79 3.79 3.57 Downside Case 3.7 3.73 3.79 3.57
24 Segment Synopsis -------------------------- Pasadena Capital Expenditures ================================================================================ (in millions) [GRAPH APPEARS HERE]
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Continue Refining 6 13.5 7.6 15.6 15.7 24.1 13.4 18.5 46.7 74.9 45 15.1 15.3 15.4 Exit Refining 6 13.5 7.6 15.6 15.7 24.1 13.4 13.5 8.9 4 3 2
25 Segment Synopsis --------------------- Tyler Refinery - -------------------------------------------------------------------------------- [X] Expected Case Value: $24 million [X] Success of operation will continue to depend on successfully serving local market needs [X] Substantial capital requirements of $150 to $200 million over the next 10 years: - To sustain ongoing operations (average $12 to $13 million per year) - To enable production of low sulfur gasoline ($10 million in 2002 to 2003) - To enable production of ultra-low sulfur diesel products ($40 million in 2004 to 2006) - To implement needed modernization of refinery control systems - To ensure operating reliability and compliance with environmental, safety and health regulations [X] Declining supplies of local sweet crude supplies will have to be replaced with other light, sweet domestic and foreign crudes 26 Segment Synopsis ------------------------- Tyler Margin Scenarios ================================================================================ Gross Margin Per Barrel (in dollars) [GRAPH APPEARS HERE]
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 USGC Coking Gross Margin 3.25 4.39 4.14 3.06 3.74 4.42 4.46 4.49 4.53 4.56 4.35 4.13 3.92 3.71 Upside Case 2.49 2.66 1.89 2.72 3.27 3.78 3.76 3.75 3.74 3.73 3.76 3.74 3.71 3.69 Expected Case 2.49 2.66 1.89 2.72 3.27 3.78 3.76 3.75 3.74 3.73 3.69 3.59 3.5 3.4 Downside Case 2.49 2.66 1.89 2.72 3.27 3.53 3.51 3.49 3.47 3.46 3.49 3.46 3.43 3.4
27 Segment Synopsis ----------------------- Tyler Capital Expenditures ================================================================================ (in $ millions) [GRAPH APPEARS HERE]
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Continuing 9.5 8.1 7.5 4.3 5 13 16 20 18 28.1 33.1 13.1 13.1 13.1 Operations
28 Segment Synopsis -------------------- Product Terminals - -------------------------------------------------------------------------------- [X] Expected Case Value: $17 million [X] Capital required for environmental remediation throughout the system [X] Wholesale marketing expenses are included in corporate overhead - Future trading gains and losses are assumed to net out over the long-term and are not included in the valuation 29 Valuation Summary ----------------------- Valuation Summary: Expected Case, Continue Refining - -------------------------------------------------------------------------------- ($ thousands)
Crown Retail 2000 2001 2002 2003 2004 2005 2006 - ----------------------------------------------------------------------------------------------------------------------------------- EBITDA 30,777 33,130 33,670 34,219 34,778 35,345 35,922 Depreciation 12,904 10,091 8,780 8,665 7,699 7,135 7,338 Taxes @ 38.0% 6,792 8,755 9,458 9,711 10,290 10,720 10,862 Capital Expenditures 10,000 10,180 10,313 10,448 10,586 10,726 10,869 Cash Flow 13,985 14,195 13,899 14,060 13,902 13,899 14,191 -------- ------- ------- ------- -------- -------- ------- ----------- Present value factor @ 13.0% $ 116,575 94% 83% 74% 65% 58% 51% 45% ----------- Pasadena Refinery 2000 2001 2002 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------------------------------------- EBITDA 42,774 61,245 61,157 62,381 62,888 63,637 55,741 Depreciation 7,720 9,712 11,340 12,580 16,646 25,204 31,836 Taxes @ 38.0% 13,320 19,583 18,930 18,924 17,572 14,605 9,084 Capital Expenditures 15,704 24,050 13,400 18,460 46,650 74,904 45,023 -------- ------- ------- ------- -------- -------- ------- Cash Flow 13,750 17,612 28,827 24,997 (1,334) (25,871) 1,634 ----------- Present value factor @ 13.0% $ 103,673 94% 83% 74% 65% 58% 51% 45% ----------- La Gloria Refinery 2000 2001 2002 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------------------------------------- EBITDA 18,684 27,787 27,104 26,583 26,000 25,548 24,362 Depreciation 3,840 5,031 7,124 9,236 10,956 13,360 16,894 Taxes @ 38.0% 5,641 8,647 7,593 6,592 5,717 4,632 2,838 Capital Expenditures 5,000 13,010 16,020 20,030 18,041 28,051 33,062 -------- ------- ------- ------- -------- -------- ------- Cash Flow 8,043 6,130 3,492 (39) 2,243 (7,134) (11,537) ----------- Present value factor @ 13.0% $ 24,232 94% 83% 74% 65% 58% 51% 45% ----------- Terminals (Crown and La Gloria) 2000 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------------------------------------------------------- EBITDA 6,212 6,350 6,490 6,688 6,792 6,928 7,067 Depreciation 1,205 1,589 1,947 2,210 2,353 2,504 2,678 Taxes @ 38.0% 1,903 1,809 1,726 1,701 1,687 1,681 1,668 -------- ------- ------- ------- -------- -------- ------- Capital Expenditures 3,280 3,100 3,325 2,375 3,020 3,080 3,142 Cash Flow 1,030 1,441 1,439 2,611 2,086 2,166 2,257 ----------- Present value factor @ 13.0% $ 16,708 94% 83% 74% 65% 58% 51% 45% ----------- Corporate 2000 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------------------------------------------------------- Wholesale Marketing Costs 2,200 2,240 2,280 2,321 2,363 2,405 2,449 Administration and Shared Services 14,000 14,252 14,509 14,770 15,036 15,306 15,582 Severence Costs 3,500 - - - - - - Transaction Fees 3,500 - - - - - - Corporate Depreciation 5,274 5,109 4,950 4,802 2,423 48 31 Tax Benefit @ 38.0% (10,820) (8,208) (8,261) (8,319) (7,532) (6,749) (6,863) --------- ------- ------- ------- -------- -------- ------- Cash Flow (12,380) (8,283) (8,528) (8,771) (9,866) (10,963) (11,167) ------------ Present value factor @ 13.0% $ (85,925) 94% 83% 74% 65% 58% 51% 45% ------------ Residual Crown Retail 2007 2008 2009 Value - ---------------------------------------------------------------------------------- EBITDA 36,507 37,103 37,708 Depreciation 7,660 8,126 8,622 Taxes @ 38.0% 10,962 11,011 11,053 Capital Expenditures 11,014 11,162 11,313 Cash Flow 14,531 14,929 15,342 ------- ------- -------- ---------- Present value factor @ 13.0% 40% 35% 31% $ 34,767 ---------- Residual Pasadena Refinery 2007 2008 2009 Value - -------------------------------------------------------------------------------- EBITDA 47,486 38,502 29,832 Depreciation 31,512 28,749 26,881 Taxes @ 38.0% 6,070 3,706 1,121 Capital Expenditures 15,143 15,264 15,386 ------- ------- -------- Cash Flow 26,272 19,532 13,324 ---------- Present value factor @ 13.0% 40% 35% 31% $ 30,193 ---------- Residual La Gloria Refinery 2007 2008 2009 Value - ---------------------------------------------------------------------------------- EBITDA 22,245 20,098 17,920 Depreciation 18,073 17,193 16,904 Taxes @ 38.0% 1,585 1,104 386 Capital Expenditures 13,072 13,083 13,094 ------- ------- -------- Cash Flow 7,587 5,911 4,440 ---------- Present value factor @ 13.0% 40% 35% 31% $ 10,061 ---------- Residual Terminals (Crown and La Gloria) 2007 2008 2009 Value - -------------------------------------------------------------------------------- EBITDA 7,208 7,352 7,499 Depreciation 2,892 3,099 3,304 Taxes @ 38.0% 1,640 1,616 1,594 Capital Expenditures 3,205 3,269 3,334 ------- ------- --------- Cash Flow 2,363 2,467 2,571 ---------- Present value factor @ 13.0% 40% 35% 31% $ 5,825 ---------- Residual Corporate 2007 2008 2009 Value - -------------------------------------------------------------------------------- Wholesale Marketing Costs 2,493 2,537 2,583 Administration and Shared Services 15,862 16,148 16,438 Severence Costs - - - Transaction Fees - - - Corporate Depreciation 17 17 17 Tax Benefit @ 38.0% (6,981) (7,107) (7,235) ------- ------- -------- Cash Flow (11,374) (11,578) (11,787) ---------- Present value factor @ 13.0% 40% 35% 31% $ (26,710) ----------
30 Valuation Summary --------------------------- Valuation Summary: Expected Case, Continue Refining ================================================================================ ($ thousands)
Total, All Segments 2000 2001 2002 2003 2004 2005 2006 2007 2008 - ------------------------------------------------------------------------------------------------------------------------------------ EBITDA 75,247 112,019 111,633 112,780 113,059 113,747 105,062 95,091 84,370 Depreciation 30,944 31,532 34,142 37,493 40,077 48,251 58,777 60,154 57,184 Taxes @ 38.0% 16,835 30,585 29,447 28,609 27,733 24,889 17,588 13,276 10,331 Capital Expenditures 33,984 50,340 43,058 51,314 78,297 116,761 92,095 42,434 42,778 -------- -------- -------- -------- -------- --------- -------- -------- -------- Unlevered Cash Flow 24,428 31,094 39,129 32,858 7,030 (27,903) (4,622) 39,381 31,261 ---------- Present value factor @ 13.0% $ 175,263 94% 83% 74% 65% 58% 51% 45% 40% 35% ---------- NOL Valuation 2000 2001 2002 2003 2004 2005 2006 2007 2008 - ----------------------------------------------------------------------------------------------------------------------------------- Avalable NOL 90,000 86,884 83,769 80,653 77,538 74,422 71,306 68,191 65,075 Equity Value @ $5.43 / share $ 54,660 Federal Reserve Rate 5.7% EBIT 44,303 80,487 77,492 75,287 72,982 65,497 46,285 34,937 27,186 Interest @ 10.9% 14,138 14,138 14,138 14,138 14,138 14,138 14,138 14,138 14,138 -------- -------- -------- -------- -------- --------- -------- -------- -------- EBT (before NOL) 30,165 66,350 63,354 61,149 58,845 51,359 32,147 20,800 13,048 Applied NOL 3,116 3,116 3,116 3,116 3,116 3,116 3,116 3,116 3,116 Tax Savings @ 38.0% 1,184 1,184 1,184 1,184 1,184 1,184 1,184 1,184 1,184 ---------- Present value factor @ 13.0% $ 9,397 94% 83% 74% 65% 58% 51% 45% 40% 35% ---------- Equity Return 2000 2001 2002 2003 2004 2005 2006 2007 2008 - ----------------------------------------------------------------------------------------------------------------------------------- Unlevered Cash Flow 24,428 31,094 39,129 32,858 7,030 (27,903) (4,622) 39,381 31,261 Interest @ 10.9% 14,138 14,138 14,138 14,138 14,138 14,138 14,138 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 5,372 5,372 5,372 5,372 5,372 5,372 5,372 -------- -------- -------- -------- -------- ---------- -------- -------- -------- Equity Cash Flow (Before NOL) 15,663 22,329 30,363 24,092 (1,736) (36,668) (13,387) 30,615 22,496 ---------- Present value factor @ 23.84% $ 63,429 90% 73% 59% 47% 38% 31% 25% 20% 16% ---------- Present value factor @ 20.35% $ 71,440 91% 76% 63% 52% 43% 36% 30% 25% 21% ---------- Present value factor @ 17.83% $ 79,438 92% 78% 66% 56% 48% 41% 34% 29% 25% ---------- Present value factor @ 15.90% $ 87,499 93% 80% 69% 60% 51% 44% 38% 33% 29% ---------- Check -------- -------- NOL Value @ $7.00 / share; 23.84% $ 7,068 Equity Value @ $7.00 / share $ 70,497 $ 7.00 -------- -------- NOL Value @ $8.00 / share; 20.35% $ 9,128 Equity Value @ $8.00 / share $ 80,568 $ 8.00 -------- -------- NOL Value @ $9.00 / share; 17.83% $ 11,201 Equity Value @ $9.00 / share $ 90,639 $ 9.00 -------- -------- NOL Value @ $10.00 / share; 15.90% $ 13,211 Equity Value @ $10.00 / share $100,710 $ 10.00 -------- -------- Residual Total, All Segments 2009 Value - ---------------------------------------------------------------------------- EBITDA 73,938 Depreciation 55,727 Taxes @ 38.0% 6,920 Capital Expenditures 43,127 -------- Unlevered Cash Flow 23,890 --------- Present value factor @ 13.0% 31% $ 54,137 --------- NOL Valuation 2009 2010 - ----------------------------------------------------------------------------- Avalable NOL 61,960 58,844 Equity Value @ $5.43 / share Federal Reserve Rate EBIT 18,211 Interest @ 10.9% 14,138 -------- EBT (before NOL) 4,074 Applied NOL 3,116 3,116 Tax Savings @ 38.0% 1,184 1,184 Present value factor @ 13.0% 31% 28% Residual Equity Return 2009 Value - ----------------------------------------------------------------------------- Unlevered Cash Flow 23,890 Interest @ 10.9% 14,138 Tax Benefit @ 38.0% 5,372 -------- Equity Cash Flow (Before NOL) 15,125 -------- Present value factor @ 23.84% 13% $ 7,477 -------- Present value factor @ 20.35% 17% $ 11,659 -------- Present value factor @ 17.83% 21% $ 16,444 -------- Present value factor @ 15.90% 25% $ 21,737 -------- ------ Equity IRR @ $ 7.00 / share 23.8% ------ Equity IRR @ $ 8.00 / share 20.4% ------ Equity IRR @ $ 9.00 / share 17.8% ------ Equity IRR @ $10.00 / share 15.9% ------
31 Valuation Summary ---------------------- Valuation Summary: Expected Case, Exit Refining ================================================================================ ($ thousands)
Crown Retail 2000 2001 2002 2003 2004 2005 2006 2007 2008 - ------------------------------------------------------------------------------------------------------------------------------------ EBITDA 30,777 33,130 33,670 34,219 34,778 35,345 35,922 36,507 37,103 Depreciation 12,904 10,091 8,780 8,665 7,699 7,135 7,338 7,660 8,126 Taxes @ 38.0% 6,792 8,755 9,458 9,711 10,290 10,720 10,862 10,962 11,011 Capital Expenditures 10,000 10,180 10,313 10,448 10,586 10,726 10,869 11,014 11,162 Cash Flow 13,985 14,195 13,899 14,060 13,902 13,899 14,191 14,531 14,929 -------- ------- -------- --------- -------- -------- --------- -------- -------- --------- Present value factor @ 13.0% $ 116,575 94% 83% 74% 65% 58% 51% 45% 40% 35% --------- Pasadena Refinery 2000 2001 2002 2003 2004 2005 2006 2007 2008 - ------------------------------------------------------------------------------------------------------------------------------------ EBITDA 42,633 61,104 61,017 62,240 62,747 63,497 55,601 47,345 37,008 Depreciation 7,720 9,712 11,340 12,080 11,966 10,590 8,853 7,614 37,000 Taxes @ 38.0% 13,267 19,529 18,877 19,061 19,297 20,105 17,764 15,098 3 Capital Expenditures 15,704 24,050 13,400 13,460 8,850 4,000 3,016 2,032 - -------- ------- -------- --------- -------- -------- --------- -------- -------- Cash Flow 13,663 17,525 28,740 29,719 34,600 39,392 34,821 30,215 37,005 --------- Present value factor @ 13.0% $ 148,978 94% 83% 74% 65% 58% 51% 45% 40% 35% --------- La Gloria Refinery 2000 2001 2002 2003 2004 2005 2006 2007 2008 - ------------------------------------------------------------------------------------------------------------------------------------ EBITDA 18,684 27,787 27,104 26,583 26,000 25,548 24,362 22,245 20,098 Depreciation 3,840 5,031 7,124 9,236 10,956 13,360 16,894 18,073 17,193 Taxes @ 38.0% 5,641 8,647 7,593 6,592 5,717 4,632 2,838 1,585 1,104 Capital Expenditures 5,000 13,010 16,020 20,030 18,041 28,051 33,062 13,072 13,083 -------- ------- -------- --------- -------- -------- --------- -------- -------- Cash Flow 8,043 6,130 3,492 (39) 2,243 (7,134) (11,537) 7,587 5,911 --------- Present value factor @ 13.0% $ 24,232 94% 83% 74% 65% 58% 51% 45% 40% 35% --------- Terminals (Crown and La Gloria) 2000 2001 2002 2003 2004 2005 2006 2007 2008 - ------------------------------------------------------------------------------------------------------------------------------------ EBITDA 6,212 6,350 6,490 6,688 6,792 6,928 7,067 7,208 7,352 Depreciation 1,205 1,589 1,947 2,210 2,353 2,504 2,678 2,892 3,099 Taxes @ 38.0% 1,903 1,809 1,726 1,701 1,687 1,681 1,668 1,640 1,616 Capital Expenditures 3,280 3,100 3,325 2,375 3,020 3,080 3,142 3,205 3,269 -------- ------- -------- --------- -------- -------- --------- -------- -------- Cash Flow 1,030 1,441 1,439 2,611 2,086 2,166 2,257 2,363 2,467 --------- Present value factor @ 13.0% $ 16,708 94% 83% 74% 65% 58% 51% 45% 40% 35% --------- Corporate 2000 2001 2002 2003 2004 2005 2006 2007 2008 - ------------------------------------------------------------------------------------------------------------------------------------ Wholesale Marketing Costs 2,200 2,240 2,280 2,321 2,363 2,405 2,449 2,493 2,537 Administration and Shared Services 14,000 14,252 14,509 14,770 15,036 15,306 15,582 15,862 16,148 Severence Costs 3,500 - - - - - - - - Transaction Fees 3,500 - - - - - - - - Corporate Depreciation 5,274 5,109 4,950 4,802 2,423 48 31 17 17 Tax Benefit @ 38.0% (10,820) (8,208) (8,261) (8,319) (7,532) (6,749) (6,863) (6,981) (7,107) -------- ------- -------- --------- -------- -------- --------- -------- -------- Cash Flow (12,380) (8,283) (8,528) (8,771) (9,866) (10,963) (11,167) (11,374) (11,578) ----------- Present value factor @ 13.0% $ (77,162) 94% 83% 74% 65% 58% 51% 45% 40% 35% ----------- Residual 2009 Value - ------------------------------------------------------------------------- EBITDA 37,708 Depreciation 8,622 Taxes @ 38.0% 11,053 Capital Expenditures 11,313 --------- Cash Flow 15,342 --------- Present value factor @ 13.0% 31% $ 34,767 --------- Residual Pasadena Refinery 2009 Value - ------------------------------------------------------------------------- EBITDA - Depreciation - Taxes @ 38.0% - Capital Expenditures - --------- Cash Flow - --------- Present value factor @ 13.0% 31% $ - --------- Residual La Gloria Refinery 2009 Value - ------------------------------------------------------------------------- EBITDA 17,920 Depreciation 16,904 Taxes @ 38.0% 386 Capital Expenditures 13,094 --------- Cash Flow 4,440 --------- Present value factor @ 13.0% 31% $ 10,061 --------- Residual Terminals (Crown and La Gloria) 2009 Value - ------------------------------------------------------------------------- EBITDA 7,499 Depreciation 3,304 Taxes @ 38.0% 1,594 Capital Expenditures 3,334 --------- Cash Flow 2,571 --------- Present value factor @ 13.0% 31% $ 5,825 --------- Residual Corporate 2009 Value - ------------------------------------------------------------------------- Wholesale Marketing Costs 2,583 Administration and Shared Services 10,959 Severence Costs - Transaction Fees - Corporate Depreciation 17 Tax Benefit @ 38.0% (5,152) --------- Cash Flow (8,390) --------- Present value factor @ 13.0% 31% $ (19,011) ---------
32 Valuation Summary ----------------- Valuation Summary: Expected Case, Exit Refining ================================================================================ ($ thousands)
Total, All Segments 2000 2001 2002 2003 2004 2005 2006 - ------------------------------------------------------------------------------------------------------------------------ EBITDA 75,107 111,879 111,493 112,640 112,919 113,607 104,921 Depreciation 30,944 31,532 34,142 36,993 35,397 33,636 35,794 Taxes @ 38.0% 16,782 30,532 29,393 28,746 29,458 30,389 26,268 Capital Expenditures 33,984 50,340 43,058 46,314 40,497 45,858 50,088 ------- ------- ------- ------- ------- ------- ------- Unlevered Cash Flow 24,341 31,007 39,041 37,581 42,964 37,361 28,564 ------------ Present value factor @ 13.0% $ 229,330 94% 83% 74% 65% 58% 51% 45% ------------ NOL Valuation 2000 2001 2002 2003 2004 2005 2006 - ------------------------------------------------------------------------------------------------------------------------ Available NOL 90,000 83,403 76,805 70,208 63,611 57,013 50,416 Equity Value @ $11.49 / share $ 115,743 Federal Reserve Rate 5.7% EBIT 44,162 80,347 77,351 75,646 77,522 79,971 69,127 Interest @ 10.9% 14,138 14,138 14,138 14,138 14,138 14,138 14,138 ------- ------- ------- ------- ------- ------- ------- EBT (before NOL) 30,025 66,210 63,214 61,509 63,384 65,833 54,990 Applied NOL 6,597 6,597 6,597 6,597 6,597 6,597 6,597 Tax Savings @ 38.0% 2,507 2,507 2,507 2,507 2,507 2,507 2,507 ----------- Present value factor @ 13.0% $ 16,413 94% 83% 74% 65% 58% 51% 45% ----------- Equity Return 2000 2001 2002 2003 2004 2005 2006 - ------------------------------------------------------------------------------------------------------------------------ Unlevered Cash Flow 24,341 31,007 39,041 37,581 42,964 37,361 28,564 Interest @ 10.9% 14,138 14,138 14,138 14,138 14,138 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 5,372 5,372 5,372 5,372 5,372 ------- ------- ------- ------- ------- ------- ------- Equity Cash Flow (Before NOL) 15,576 22,242 30,276 28,815 34,199 28,595 19,799 ------------ Present value factor @ 41.60% $ 66,145 84% 59% 42% 30% 21% 15% 10% ------------ Present value factor @ 36.06% $ 74,972 86% 63% 46% 34% 25% 18% 14% ------------ Present value factor @ 31.70% $ 83,653 87% 66% 50% 38% 29% 22% 17% ------------ Present value factor @ 28.15% $ 92,211 88% 69% 54% 42% 33% 26% 20% ------------ Check -------- --------- NOL Value @ $7.00 / share; 41.60% $ 4,352 Equity Value @ $7.00 / share $ 70,497 $ 7.00 -------- --------- NOL Value @ $8.00 / share; 36.06% $ 5,596 Equity Value @ $8.00 / share $ 80,568 $ 8.00 -------- --------- NOL Value @ $9.00 / share; 31.70% $ 6,986 Equity Value @ $9.00 / share $ 90,639 $ 9.00 -------- --------- NOL Value @ $10.00 / share; 28.15% $ 8,499 Equity Value @ $10.00 / share $ 100,710 $ 10.00 -------- --------- Residual Total, All Segments 2007 2008 2009 Value - ------------------------------------------------------------------------------ EBITDA 94,951 82,875 49,585 Depreciation 36,256 65,435 28,846 Taxes @ 38.0% 22,304 6,627 7,881 Capital Expenditures 29,323 27,514 27,741 ------- ------- ------- Unlevered Cash Flow 43,323 48,734 13,964 --------- Present value factor @ 13.0% 40% 35% 31% $ 31,642 --------- NOL Valuation 2007 2008 2009 2010 - ------------------------------------------------------------------------------ Avalable NOL 43,819 37,221 33,918 27,321 Equity Value @ $11.49 / share Federal Reserve Rate EBIT 58,695 17,441 20,739 Interest @ 10.9% 14,138 14,138 14,138 ------- ------- ------- EBT (before NOL) 44,557 3,303 6,602 Applied NOL 6,597 3,303 6,597 6,597 Tax Savings @ 38.0% 2,507 1,255 2,507 2,507 Present value factor @ 13.0% 40% 35% 31% 28% Residual Equity Return 2007 2008 2009 Value - ------------------------------------------------------------------------------ Unlevered Cash Flow 43,323 48,734 13,964 Interest @ 10.9% 14,138 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 5,372 ------- ------- ------- Equity Cash Flow (Before NOL) 34,558 39,969 5,198 ---------- Present value factor @ 41.60% 7% 5% 4% $ 386 ---------- Present value factor @ 36.06% 10% 7% 5% $ 663 ---------- Present value factor @ 31.70% 13% 10% 7% $ 1,045 ---------- Present value factor @ 28.15% 16% 12% 9% $ 1,547 ---------- ---------- Equity IRR @ $7.00 / share 41.6% ---------- Equity IRR @ $8.00 / share 36.1% ---------- Equity IRR @ $9.00 / share 31.7% ---------- Equity IRR @ $10.00 / share 28.1% ----------
33 Valuation Summary ------------------------ Valuation Summary: Downside Case, Continue Refining ================================================================================ ($ thousands)
Crown Retail 2000 2001 2002 2003 2004 2005 2006 2007 - ---------------------------------------------------------------------------------------------------------------------------------- EBITDA 28,798 31,029 31,535 32,048 32,570 33,101 33,640 34,187 Depreciation 12,904 10,091 8,780 8,665 7,699 7,135 7,338 7,660 Taxes @ 38.0% 6,040 7,957 8,647 8,886 9,451 9,867 9,995 10,081 Capital Expenditures 10,000 10,180 10,313 10,448 10,586 10,726 10,869 11,014 Cash Flow 12,759 12,893 12,575 12,714 12,533 12,507 12,776 13,093 ---------- -------- ------- ------- ------- ------- ------- ------- ------- Present value factor @ 13.0% $ 105,416 94% 83% 74% 65% 58% 51% 45% 40% ---------- Pasadena Refinery 2000 2001 2002 2003 2004 2005 2006 2007 - ---------------------------------------------------------------------------------------------------------------------------------- EBITDA 42,774 44,442 44,053 44,968 45,161 45,592 45,773 45,587 Depreciation 7,720 9,712 11,340 12,580 16,646 25,204 31,836 31,512 Taxes @ 38.0% 13,320 13,198 12,431 12,307 10,836 7,747 5,296 5,349 Capital Expenditures 15,704 24,050 13,400 18,460 46,650 74,904 45,023 15,143 -------- ------- ------- ------- ------- ------- ------- ------- Cash Flow 13,750 7,195 18,222 14,201 (12,325) (37,059) (4,546) 25,096 ---------- Present value factor @ 13.0% $ 64,832 94% 83% 74% 65% 58% 51% 45% 40% ---------- La Gloria Refinery 2000 2001 2002 2003 2004 2005 2006 2007 - ---------------------------------------------------------------------------------------------------------------------------------- EBITDA 18,684 23,165 22,399 21,792 21,123 20,584 20,649 19,781 Depreciation 3,840 4,942 6,886 8,901 10,566 12,949 16,489 17,690 Taxes @ 38.0% 5,641 6,925 5,895 4,899 4,012 2,901 1,581 795 Capital Expenditures 5,000 12,120 15,241 19,364 17,487 27,612 32,738 12,866 -------- ------- ------- ------- ------- ------- ------- ------- Cash Flow 8,043 4,120 1,263 (2,470) (376) (9,929) (13,670) 6,121 ---------- Present value factor @ 13.0% $ 14,223 94% 83% 74% 65% 58% 51% 45% 40% ---------- Terminals (Crown and La Gloria) 2000 2001 2002 2003 2004 2005 2006 2007 - ---------------------------------------------------------------------------------------------------------------------------------- EBITDA 6,212 6,350 6,490 6,688 6,792 6,928 7,067 7,208 Depreciation 1,205 1,589 1,947 2,210 2,353 2,504 2,678 2,892 Taxes @ 38.0% 1,903 1,809 1,726 1,701 1,687 1,681 1,668 1,640 Capital Expenditures 3,280 3,100 3,325 2,375 3,020 3,080 3,142 3,205 -------- ------- ------- ------- ------- ------- ------- ------- Cash Flow 1,030 1,441 1,439 2,611 2,086 2,166 2,257 2,363 ---------- Present value factor @ 13.0% $ 16,708 94% 83% 74% 65% 58% 51% 45% 40% ---------- Corporate 2000 2001 2002 2003 2004 2005 2006 2007 - ---------------------------------------------------------------------------------------------------------------------------------- Wholesale Marketing Costs 2,200 2,240 2,280 2,321 2,363 2,405 2,449 2,493 Administration and Shared Services 16,000 16,288 16,581 16,880 17,183 17,493 17,808 18,128 Severence Costs 3,500 - - - - - - - Transaction Fees 3,500 - - - - - - - Corporate Depreciation 5,274 5,109 4,950 4,802 2,423 48 31 17 Tax Benefit @ 38.0% (11,580) (8,982) (9,048) (9,121) (8,348) (7,579) (7,709) (7,842) -------- ------- ------- ------- ------- ------- ------- ------- Cash Flow (13,620) (9,546) (9,813) (10,080) (11,198) (12,319) (12,547) (12,778) ---------- Present value factor @ 13.0% $ (96,849) 94% 83% 74% 65% 58% 51% 45% 40% ---------- Residual Crown Retail 2008 2009 Value - ------------------------------------------------------------------------ EBITDA 34,744 35,310 Depreciation 8,126 8,622 Taxes @ 38.0% 10,115 10,141 Capital Expenditures 11,162 11,313 Cash Flow 13,467 13,856 ------- ------- --------- Present value factor @ 13.0% 35% 31% $ 31,397 --------- Residual Pasadena Refinery 2008 2009 Value - ------------------------------------------------------------------------ EBITDA 38,502 29,832 Depreciation 28,749 26,881 Taxes @ 38.0% 3,706 1,121 Capital Expenditures 15,264 15,386 ------- ------- Cash Flow 19,532 13,324 --------- Present value factor @ 13.0% 35% 31% $ 30,193 --------- Residual La Gloria Refinery 2008 2009 Value - ------------------------------------------------------------------------ EBITDA 18,882 17,950 Depreciation 16,840 16,589 Taxes @ 38.0% 776 517 Capital Expenditures 12,994 13,124 ------- ------- Cash Flow 5,112 4,309 --------- Present value factor @ 13.0% 35% 31% $ 9,764 --------- Residual Terminals (Crown and La Gloria) 2008 2009 Value - ------------------------------------------------------------------------ EBITDA 7,352 7,499 Depreciation 3,099 3,304 Taxes @ 38.0% 1,616 1,594 Capital Expenditures 3,269 3,334 ------- ------- Cash Flow 2,467 2,571 --------- Present value factor @ 13.0% 35% 31% $ 5,825 --------- Residual Corporate 2008 2009 Value - ------------------------------------------------------------------------ Wholesale Marketing Costs 2,537 2,583 Administration and Shared Services 18,454 18,787 Severence Costs - - Transaction Fees - - Corporate Depreciation 17 17 Tax Benefit @ 38.0% (7,983) (8,127) ------- ------- Cash Flow (13,009) (13,243) ---------- Present value factor @ 13.0% 35% 31% $ (30,009) ----------
34
Valuation Summary --------------------------- Valuation Summary : Downside Case, Continue Refining ============================================================================================================= ($ thousands) Total, All Segments 2000 2001 2002 - ------------------------------------------------------------------------------------------------------------- EBITDA 71,268 86,458 85,615 Depreciation 30,944 31,443 33,904 Taxes @ 38.0% 15,323 20,906 19,650 Capital Expenditures 33,984 49,450 42,279 --------- -------- -------- Unlevered Cash Flow ------------ 21,961 16,102 23,686 Present value factor @ 13.0% $ 104,330 94% 83% 74% ------------ NOL Valuation 2000 2001 2002 - ------------------------------------------------------------------------------------------------------------- Available NOL 90,000 91,771 93,543 Equity Value @ -$3.09 / share $ (31,076) Federal Reserve Rate 5.7% EBIT 40,324 55,016 51,711 Interest @ 10.9% 14,138 14,138 14,138 --------- -------- -------- EBT (before NOL) 26,186 40,878 37,574 Applied NOL (1,771) (1,771) (1,771) Tax Savings @ 38.0% ------------- (673) (673) (673) Present value factor @ 13.0% $ (5,406) 94% 83% 74% ------------- Equity Return 2000 2001 2002 - -------------------------------------------------------------------------------------------------------------- Unlevered Cash Flow 21,961 16,102 23,686 Interest @ 10.9% 14,138 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 5,372 --------- -------- -------- Equity Cash Flow (Before NOL) ------------ 13,196 7,337 14,920 Present value factor @ 9.52% $ 56,392 96% 87% 80% ------------ Present value factor @ 8.78% $ 64,320 96% 88% 81% ------------ Present value factor @ 8.15% $ 72,473 96% 89% 82% ------------ Present value factor @ 7.61% $ 80,842 96% 90% 83% ------------ ---------- NOL Value @ $7.00 / share; 9.52% $ 14,103 ---------- NOL Value @ $8.00 / share; 8.78% $ 16,246 ---------- NOL Value @ $9.00 / share; 8.15% $ 18,165 ---------- NOL Value @ $10.00 /share; 7.61% $ 19,867 ---------- Total, All Segments 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------------------- EBITDA 86,296 86,101 86,307 86,872 Depreciation 37,158 39,687 47,839 58,371 Taxes @ 38.0% 18,672 17,637 14,618 10,830 Capital Expenditures 50,647 77,743 116,322 91,772 -------- --------- --------- ------- Unlevered Cash Flow 16,977 (9,279) (44,633) (15,731) Present value factor @ 13.0% 65% 58% 51% 45% NOL Valuation 2003 2004 2005 2006 - -------------------------------------------------------------------------------------------------------------- Avalable NOL 95,314 97,085 98,857 100,628 Equity Value @ -$3.09 / share Federal Reserve Rate EBIT 49,138 46,414 38,468 28,500 Interest @ 10.9% 14,138 14,138 14,138 14,138 -------- --------- --------- ------- EBT (before NOL) 35,000 32,277 24,330 14,363 Applied NOL (1,771) (1,771) (1,771) (1,771) Tax Savings @ 38.0% (673) (673) (673) (673) Present value factor @ 13.0% 65% 58% 51% 45% Equity Return 2003 2004 2005 2006 - -------------------------------------------------------------------------------------------------------------- Unlevered Cash Flow 16,977 (9,279) (44,633) (15,731) Interest @ 10.9% 14,138 14,138 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 5,372 5,372 -------- --------- --------- ------- Equity Cash Flow (Before NOL) 8,212 (18,045) (53,398) (24,496) Present value factor @ 9.52% 73% 66% 61% 55% Present value factor @ 8.78% 74% 68% 63% 58% Present value factor @ 8.15% 76% 70% 65% 60% Present value factor @ 7.61% 77% 72% 67% 62% ---------- Check Equity Value @ $7.00 / share $ 70,495 $ 7.00 ---------- Equity Value @ $8.00 / share $ 80,565 $ 8.00 ---------- Equity Value @ $9.00 / share $ 90,638 $ 9.00 ---------- Equity Value @ $10.00 / share $ 100,710 $ 10.00 ---------- Residual Total, All Segments 2007 2008 2009 Value - -------------------------------------------------------------------------------------------------------------- EBITDA 86,143 78,488 69,222 Depreciation 59,771 56,831 55,413 Taxes @ 38.0% 10,021 8,230 5,247 Capital Expenditures 42,228 42,690 43,158 --------- ---------- -------- Unlevered Cash Flow 33,894 27,569 20,816 ------------ Present value factor @ 13.0% 40% 35% 31% $ 47,171 ------------ NOL Valuation 2007 2008 2009 2010 - -------------------------------------------------------------------------------------------------------------- Avalable NOL 102,399 104,171 105,942 107,713 Equity Value @ -$3.09 / share Federal Reserve Rate EBIT 26,372 21,657 13,809 Interest @ 10.9% 14,138 14,138 14,138 --------- ---------- -------- EBT (before NOL) 12,235 7,520 (328) Applied NOL (1,771) (1,771) (1,771) (1,771) Tax Savings @ 38.0% (673) (673) (673) (673) Present value factor @ 13.0% 40% 35% 31% 28% Residual Equity Return 2007 2008 2009 Value - -------------------------------------------------------------------------------------------------------------- Unlevered Cash Flow 33,894 27,569 20,816 Interest @ 10.9% 14,138 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 5,372 ---------- ---------- -------- Equity Cash Flow (Before NOL) 25,129 18,804 12,051 ------------ Present value factor @ 9.52% 51% 46% 42% $ 50,988 ------------ Present value factor @ 8.78% 53% 49% 45% $ 59,158 ------------ Present value factor @ 8.15% 56% 51% 47% $ 67,511 ------------ Present value factor @ 7.61% 58% 54% 50% $ 76,046 ------------ ------------- Equity IRR @ $7.00 / share 9.5% ------------- Equity IRR @ $8.00 / share 8.8% ------------ Equity IRR @ $9.00 / share 8.2% ------------ Equity IRR @ $10.00 / share 7.6% ------------
CROWN IS UNLIKELY TO BE ABLE TO REFINANCE ITS LONG-TERM DEBT AT CURRENT RATES IN THE DOWNSIDE SCENARIO AND EQUITY RETURNS WILL LIKELY BE LOWER THAN THAT PRESENTED IN THE DOWNSIDE SCENARIO 35 Valuation Summary ----------------- Valuation Summary: Downside Case, Exit Refining - -------------------------------------------------------------------------------- ($ thousands)
Crown Retail 2000 2001 2002 2003 2004 2005 2006 2007 - ----------------------------------------------------------------------------------------------------------------------------------- EBITDA 28,798 31,029 31,535 32,048 32,570 33,101 33,640 34,187 Depreciation 12,904 10,091 8,780 8,665 7,699 7,135 7,338 7,660 Taxes @ 38.0% 6,040 7,957 8,647 8,886 9,451 9,867 9,995 10,081 Capital Expenditures 10,000 10,180 10,313 10,448 10,586 10,726 10,869 11,014 Cash Flow 12,759 12,893 12,575 12,714 12,533 12,507 12,776 13,093 --------- ------- ------- ------- ------- ------- ------- ------- ------- Present value factor @ 13.0% $ 105,416 94% 83% 74% 65% 58% 51% 45% 40% --------- Pasadena Refinery 2000 2001 2002 2003 2004 2005 2006 2007 - ----------------------------------------------------------------------------------------------------------------------------------- EBITDA 42,633 44,302 43,912 44,828 45,021 45,452 45,632 45,447 Depreciation 7,720 9,712 11,340 12,080 11,966 10,590 8,853 7,614 Taxes @ 38.0% 13,267 13,144 12,377 12,444 12,561 13,247 13,976 14,376 Capital Expenditures 15,704 24,050 13,400 13,460 8,850 4,000 3,016 2,032 ------- ------- ------- ------- ------- ------- ------- ------- Cash Flow 13,663 7,108 18,135 18,924 23,610 28,204 28,640 29,038 --------- Present value factor @ 13.0% $ 110,137 94% 83% 74% 65% 58% 51% 45% 40% --------- La Gloria Refinery 2000 2001 2002 2003 2004 2005 2006 2007 - ----------------------------------------------------------------------------------------------------------------------------------- EBITDA 18,684 23,165 22,399 21,792 21,123 20,584 20,649 19,781 Depreciation 3,840 4,942 6,886 8,901 10,566 12,949 16,489 17,690 Taxes @ 38.0% 5,641 6,925 5,895 4,899 4,012 2,901 1,581 795 Capital Expenditures 5,000 12,120 15,241 19,364 17,487 27,612 32,738 12,866 ------- ------- ------- ------- ------- ------- ------- ------- Cash Flow 8,043 4,120 1,263 (2,470) (376) (9,929) (13,670) 6,121 --------- Present value factor @ 13.0% $ 14,223 94% 83% 74% 65% 58% 51% 45% 40% --------- Terminals (Crown and La Gloria) 2000 2001 2002 2003 2004 2005 2006 2007 - ----------------------------------------------------------------------------------------------------------------------------------- EBITDA 6,212 6,350 6,490 6,688 6,792 6,928 7,067 7,208 Depreciation 1,205 1,589 1,947 2,210 2,353 2,504 2,678 2,892 Taxes @ 38.0% 1,903 1,809 1,726 1,701 1,687 1,681 1,668 1,640 Capital Expenditures 3,280 3,100 3,325 2,375 3,020 3,080 3,142 3,205 ------- ------- ------- ------- ------- ------- ------- ------- Cash Flow 1,030 1,441 1,439 2,611 2,086 2,166 2,257 2,363 --------- Present value factor @ 13.0% $ 16,708 94% 83% 74% 65% 58% 51% 45% 40% --------- Corporate 2000 2001 2002 2003 2004 2005 2006 2007 - ----------------------------------------------------------------------------------------------------------------------------------- Wholesale Marketing Costs 2,200 2,240 2,280 2,321 2,363 2,405 2,449 2,493 Administration and Shared Services 16,000 16,288 16,581 16,880 17,183 17,493 17,808 18,128 Severence Costs 3,500 - - - - - - - Transaction Fees 3,500 - - - - - - - Corporate Depreciation 5,274 5,109 4,950 4,802 2,423 48 31 17 Tax Benefit @ 38.0% (11,580) (8,982) (9,048) (9,121) (8,348) (7,579) (7,709) (7,842) ------- ------- ------- ------- ------- ------- ------- ------- Cash Flow (13,620) (9,546) (9,813) (10,080) (11,198) (12,319) (12,547) (12,778) --------- Present value factor @ 13.0% $ (86,835) 94% 83% 74% 65% 58% 51% 45% 40% --------- Residual Crown Retail 2008 2009 Value - --------------------------------------------------------------------------------- EBITDA 34,744 35,310 Depreciation 8,126 8,622 Taxes @ 38.0% 10,115 10,141 Capital Expenditures 11,162 11,313 Cash Flow 13,467 13,856 ------- ------ --------- Present value factor @ 13.0% 35% 31% $ 31,397 --------- Residual Pasadena Refinery 2008 2009 Value - --------------------------------------------------------------------------------- EBITDA 37,008 - Depreciation 37,000 - Taxes @ 38.0% 3 - Capital Expenditures - - ------- ------ Cash Flow 37,005 - --------- Present value factor @ 13.0% 35% 31% $ - --------- Residual La Gloria Refinery 2008 2009 Value - --------------------------------------------------------------------------------- EBITDA 18,882 17,950 Depreciation 16,840 16,589 Taxes @ 38.0% 776 517 Capital Expenditures 12,994 13,124 ------- ------ Cash Flow 5,112 4,309 --------- Present value factor @ 13.0% 35% 31% $ 9,764 --------- Residual Terminals (Crown and La Gloria) 2008 2009 Value EBITDA 7,352 7,499 - --------------------------------------------------------------------------------- Depreciation 3,099 3,304 Taxes @ 38.0% 1,616 1,594 Capital Expenditures 3,269 3,334 ------- ------ Cash Flow 2,467 2,571 --------- Present value factor @ 13.0% 35% 31% $ 5,825 --------- Residual Corporate 2008 2009 Value - --------------------------------------------------------------------------------- Wholesale Marketing Costs 2,537 2,583 Administration and Shared Services 18,454 12,524 Severence Costs - - Transaction Fees - - Corporate Depreciation 17 17 Tax Benefit @ 38.0% (7,983) (5,747) ------- ------ Cash Flow (13,009) (9,360) --------- Present value factor @ 13.0% 35% 31% $ (21,211) ---------
36 Valuation Summary ------------------ Valuation Summary: Downside Case, Exit Refining ================================================================================ ($ thousands)
Total, All Segments 2000 2001 2002 2003 2004 2005 2006 2007 - ----------------------------------------------------------------------------------------------------------------------------------- EBITDA 71,128 86,318 85,475 86,156 85,961 86,167 86,731 86,003 Depreciation 30,944 31,443 33,904 36,658 35,007 33,225 35,389 35,873 Taxes @ 38.0% 15,270 20,853 19,597 18,809 19,362 20,118 19,510 19,049 Capital Expenditures 33,984 49,450 42,279 45,647 39,943 45,419 49,765 29,117 ------- ------- ------- ------- ------- ------- ------- ------- Unlevered Cash Flow 21,874 16,015 23,598 21,700 26,655 20,630 17,456 37,837 ----------- Present value factor @ 13.0% $ 159,650 94% 83% 74% 65% 58% 51% 45% 40% ----------- NOL Valuation 2000 2001 2002 2003 2004 2005 2006 2007 - ----------------------------------------------------------------------------------------------------------------------------------- Available NOL 90,000 87,993 85,987 83,980 81,973 79,966 77,960 75,953 Equity Value @ $3.50 / share $ 35,205 Federal Reserve Rate 5.7% EBIT 40,184 54,875 51,571 49,497 50,954 52,942 51,343 50,130 Interest @ 10.9% 14,138 14,138 14,138 14,138 14,138 14,138 14,138 14,138 ------- ------- ------- ------- ------- ------- ------- ------- EBT (before NOL) 26,046 40,738 37,433 35,360 36,816 38,804 37,205 35,992 Applied NOL 2,007 2,007 2,007 2,007 2,007 2,007 2,007 2,007 Tax Savings @ 38.0% 763 763 763 763 763 763 763 763 ----------- Present value factor @ 13.0% $ 5,556 94% 83% 74% 65% 58% 51% 45% 40% ----------- Equity Return 2000 2001 2002 2003 2004 2005 2006 2007 - ----------------------------------------------------------------------------------------------------------------------------------- Unlevered Cash Flow 21,874 16,015 23,598 21,700 26,655 20,630 17,456 37,837 Interest @ 10.9% 14,138 14,138 14,138 14,138 14,138 14,138 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 5,372 5,372 5,372 5,372 5,372 5,372 ------- ------- ------- ------- ------- ------- ------- ------- Equity Cash Flow (Before NOL) 13,109 7,250 14,833 12,935 17,890 11,865 8,691 29,071 ----------- Present value factor @ 21.30% $ 63,198 91% 75% 62% 51% 42% 35% 29% 23% ----------- Present value factor @ 18.16% $ 71,166 92% 78% 66% 56% 47% 40% 34% 29% ----------- Present value factor @ 15.65% $ 78,991 93% 80% 70% 60% 52% 45% 39% 34% ----------- Present value factor @ 13.58% $ 86,766 94% 83% 73% 64% 56% 50% 44% 38% ----------- Check ---------- --------- NOL Value @ $7.00/share; 21.30% $ 7,299 Equity Value @ $7.00/share $ 70,497 $ 7.00 ---------- --------- NOL Value @ $8.00/share; 18.16% $ 9,402 Equity Value @ $8.00/share $ 80,568 $ 8.00 ---------- --------- NOL Value @ $9.00/share; 15.65% $ 11,648 Equity Value @ $9.00/share $ 90,639 $ 9.00 ---------- --------- NOL Value @ $10.00/share; 13.58% $ 13,944 Equity Value @ $10.00/share $ 100,710 $ 10.00 ---------- --------- Residual Total, All Segments 2008 2009 Value - ---------------------------------------------------------------------------------- EBITDA 76,994 45,652 Depreciation 65,082 28,532 Taxes @ 38.0% 4,526 6,506 Capital Expenditures 27,425 27,771 Unlevered Cash Flow 45,042 11,375 ----------- Present value factor @ 13.0% 35% 31% $ 25,776 ----------- NOL Valuation 2008 2009 2010 - ---------------------------------------------------------------------------------- Available NOL 73,946 76,172 74,165 Equity Value @ $3.50 / share Federal Reserve Rate EBIT 11,912 17,120 Interest @ 10.9% 14,138 14,138 EBT (before NOL) (2,226) 2,983 Applied NOL (2,226) 2,007 2,007 Tax Savings @ 38.0% (846) 763 763 Present value factor @ 13.0% 35% 31% 28% Residual Equity Return 2008 2009 Value - ---------------------------------------------------------------------------------- Unlevered Cash Flow 45,042 11,375 Interest @ 10.9% 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 Equity Cash Flow (Before NOL) 36,277 2,610 ----------- Present value factor @ 21.30% 19% 16% $ 1,777 ----------- Present value factor @ 18.16% 24% 20% $ 2,710 ----------- Present value factor @ 15.65% 29% 25% $ 3,898 ----------- Present value factor @ 13.58% 34% 30% $ 5,378 ----------- ----------- Equity IRR @ $7.00 / share 21.3% ----------- Equity IRR @ $8.00 / share 18.2% ----------- Equity IRR @ $9.00 / share 15.6% ----------- Equity IRR @ $10.00 / share 13.6% -----------
CROWN IS UNLIKELY TO BE ABLE TO REFINANCE ITS LONG-TERM DEBT AT CURRENT RATES IN THE DOWNSIDE SCENARIO AND EQUITY RETURNS WILL LIKELY BE LOWER THAN THAT PRESENTED IN THE DOWNSIDE SCENARIO 37 Valuation Summary ----------------------------- Valuation Summary: Upside Case, Continue Refining - -------------------------------------------------------------------------------- ($ thousands)
Crown Retail 2000 2001 2002 2003 2004 2005 2006 2007 - ------------------------------------------------------------------------------------------------------------------------------------ EBITDA 32,756 35,230 35,805 36,391 36,985 37,589 38,203 38,828 Depreciation 12,904 10,091 8,780 8,665 7,699 7,135 7,338 7,660 Taxes @ 38.0% 7,544 9,553 10,270 10,536 11,129 11,573 11,729 11,844 Capital Expenditures 10,000 10,180 10,313 10,448 10,586 10,726 10,869 11,014 Cash Flow 15,212 15,497 15,223 15,406 15,270 15,290 15,606 15,970 ----------- ------- ------ ------ ------ ------ ------ ------ ------ Present value factor @ 13.0% $ 127,733 94% 83% 74% 65% 58% 51% 45% 40% ----------- Pasadena Refinery 2000 2001 2002 2003 2004 2005 2006 2007 - --------------------------------------------------------------------------------------------------------------------------------- EBITDA 42,774 61,245 61,157 62,381 62,888 63,637 64,143 64,288 Depreciation 7,720 9,712 11,340 12,580 16,646 25,204 31,836 31,512 Taxes @ 38.0% 13,320 19,583 18,930 18,924 17,572 14,605 12,277 12,455 Capital Expenditures 15,704 24,050 13,400 18,460 46,650 74,904 45,023 15,143 ------- ------ ------ ------ ------ ------ ------ ------ Cash Flow 13,750 17,612 28,827 24,997 (1,334) (25,871) 6,843 36,690 ----------- Present value factor @ 13.0% $ 169,459 94% 83% 74% 65% 58% 51% 45% 40% ----------- La Gloria Refinery 2000 2001 2002 2003 2004 2005 2006 2007 - ------------------------------------------------------------------------------------------------------------------------------------ EBITDA 18,684 27,787 27,104 26,583 26,000 25,548 25,702 24,926 Depreciation 3,840 4,942 6,886 8,901 10,566 12,949 16,489 17,690 Taxes @ 38.0% 5,641 8,681 7,683 6,719 5,865 4,788 3,501 2,750 Capital Expenditures 5,000 12,120 15,241 19,364 17,487 27,612 32,738 12,866 ------- ------ ------ ------ ------ ------ ------ ------ Cash Flow 8,043 6,986 4,180 500 2,648 (6,851) (10,537) 9,311 ----------- Present value factor @ 13.0% $ 36,376 94% 83% 74% 65% 58% 51% 45% 40% ----------- Terminals (Crown and La Gloria) 2000 2001 2002 2003 2004 2005 2006 2007 - ------------------------------------------------------------------------------------------------------------------------------------ EBITDA 6,212 6,350 6,490 6,688 6,792 6,928 7,067 7,208 Depreciation 1,205 1,589 1,947 2,210 2,353 2,504 2,678 2,892 Taxes @ 38.0% 1,903 1,809 1,726 1,701 1,687 1,681 1,668 1,640 Capital Expenditures 3,280 3,100 3,325 2,375 3,020 3,080 3,142 3,205 ------- ----- ----- ----- ----- ----- ----- ----- Cash Flow 1,030 1,441 1,439 2,611 2,086 2,166 2,257 2,363 ----------- Present value factor @ 13.0% $ 16,708 94% 83% 74% 65% 58% 51% 45% 40% ----------- Corporate 2000 2001 2002 2003 2004 2005 2006 2007 - ------------------------------------------------------------------------------------------------------------------------------------ Wholesale Marketing Costs 2,200 2,240 2,280 2,321 2,363 2,405 2,449 2,493 Administration and Shared Services 12,000 12,216 12,436 12,660 12,888 13,120 13,356 13,596 Severence Costs 3,500 - - - - - - - Transaction Fees 3,500 - - - - - - - Corporate Depreciation 5,274 5,109 4,950 4,802 2,423 48 31 17 Tax Benefit @ 38.0% (10,060) (7,435) (7,473) (7,517) (6,716) (5,918) (6,017) (6,120) ------- ------ ------ ------ ------ ------ ------ ------ Cash Flow (11,140) (7,021) (7,243) (7,463) (8,534) (9,607) (9,787) (9,969) ------------ Present value factor @ 13.0% $ (75,000) 94% 83% 74% 65% 58% 51% 45% 40% ------------ Residual Crown Retail 2008 2009 Value - ------------------------------------------------------------------------------------- EBITDA 39,462 40,106 Depreciation 8,126 8,622 Taxes @ 38.0% 11,908 11,964 Capital Expenditures 11,162 11,313 Cash Flow 16,392 16,829 ------- ------ --------- Present value factor @ 13.0% 35% 31% $ 38,137 --------- Residual Pasadena Refinery 2008 2009 Value - ------------------------------------------------------------------------------------- EBITDA 63,706 63,437 Depreciation 28,749 26,881 Taxes @ 38.0% 13,283 13,891 Capital Expenditures 15,264 15,386 ------- ------ Cash Flow 35,158 34,159 --------- Present value factor @ 13.0% 35% 31% $ 77,407 --------- Residual La Gloria Refinery 2008 2009 Value - ------------------------------------------------------------------------------------- EBITDA 24,119 23,282 Depreciation 16,840 16,589 Taxes @ 38.0% 2,766 2,543 Capital Expenditures 12,994 13,124 ------- ------ Cash Flow 8,359 7,615 --------- Present value factor @ 13.0% 35% 31% $ 17,255 --------- Residual Terminals (Crown and La Gloria) 2008 2009 Value - ------------------------------------------------------------------------------------- EBITDA 7,352 7,499 Depreciation 3,099 3,304 Taxes @ 38.0% 1,616 1,594 Capital Expenditures 3,269 3,334 ------ ----- Cash Flow 2,467 2,571 --------- Present value factor @ 13.0% 35% 31% $ 5,825 --------- Residual Corporate 2008 2009 Value - ------------------------------------------------------------------------------------- Wholesale Marketing Costs 2,537 2,583 Administration and Shared Services 13,841 14,090 Severence Costs - - Transaction Fees - - Corporate Depreciation 17 17 Tax Benefit @ 38.0% (6,230) (6,342) ------- ------- Cash Flow (10,148) (10,331) ---------- Present value factor @ 13.0% 35% 31% $ (23,411) ----------
38 Valuation Summary --------------------------- Valuation Summary: Upside Case, Continue Refining ================================================================================ ($ thousands)
Total, All Segments 2000 2001 2002 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------------------------------- EBITDA 79,226 116,156 115,841 117,061 117,415 118,178 119,311 Depreciation 30,944 31,443 33,904 37,158 39,687 47,839 58,371 Taxes @ 38.0% 18,347 32,191 31,136 30,363 29,536 26,729 23,157 Capital Expenditures 33,984 49,450 42,279 50,647 77,743 116,322 91,772 ------- ------- ------- ------- ------- -------- ------- Unlevered Cash Flow 26,895 34,515 42,426 36,051 10,135 (24,873) 4,382 -------------- Present value factor @ 13.0% $ 275,276 94% 83% 74% 65% 58% 51% 45% -------------- NOL Valuation 2000 2001 2002 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------------------------------- Available NOL 90,000 80,570 71,141 61,711 52,281 42,851 33,422 Equity Value @ $16.43 / share $ 165,434 Federal Reserve Rate 5.7% EBIT 48,282 84,713 81,938 79,903 77,727 70,339 60,940 Interest @ 10.9% 14,138 14,138 14,138 14,138 14,138 14,138 14,138 ------- ------- ------- ------- ------- -------- ------- EBT (before NOL) 34,144 70,575 67,800 65,765 63,590 56,201 46,802 Applied NOL 9,430 9,430 9,430 9,430 9,430 9,430 9,430 Tax Savings @ 38.0% 3,583 3,583 3,583 3,583 3,583 3,583 3,583 -------------- Present value factor @ 13.0% $ 20,158 94% 83% 74% 65% 58% 51% 45% -------------- Equity Return 2000 2001 2002 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------------------------------- Unlevered Cash Flow 26,895 34,515 42,426 36,051 10,135 (24,873) 4,382 Interest @ 10.9% 14,138 14,138 14,138 14,138 14,138 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 5,372 5,372 5,372 5,372 5,372 ------- ------- ------- ------- ------- -------- ------- Equity Cash Flow (Before NOL) 18,130 25,749 33,661 27,286 1,370 (33,638) (4,383) -------------- Present value factor @ 36.04% $ 65,561 86% 63% 46% 34% 25% 18% 14% -------------- Present value factor @ 31.55% $ 74,254 87% 66% 50% 38% 29% 22% 17% -------------- Present value factor @ 28.25% $ 82,873 88% 69% 54% 42% 33% 25% 20% -------------- Present value factor @ 25.70% $ 91,460 89% 71% 56% 45% 36% 28% 23% -------------- --------- ---------- Check NOL Value @ $7.00 / share; 36.04% $ 4,936 Equity Value @ $7.00 / share $ 70,497 $ 7.00 --------- ---------- NOL Value @ $8.00 / share; 31.55% $ 6,314 Equity Value @ $8.00 / share $ 80,568 $ 8.00 --------- ---------- NOL Value @ $9.00 / share; 28.25% $ 7,766 Equity Value @ $9.00 / share $ 90,639 $ 9.00 --------- ---------- NOL Value @ $10.00 / share; 25.70% $ 9,250 Equity Value @ $10.00 / share $100,710 $10.00 --------- ---------- Residual Total, All Segments 2007 2008 2009 Value - -------------------------------------------------------------------------------------------- EBITDA 119,161 118,261 117,651 Depreciation 59,771 56,831 55,413 Taxes @ 38.0% 22,568 23,343 23,651 Capital Expenditures 42,228 42,690 43,158 -------- ------- ------- Unlevered Cash Flow 54,365 52,228 50,843 --------- Present value factor @ 13.0% 40% 35% 31% $ 115,213 --------- NOL Valuation 2007 2008 2009 2010 - -------------------------------------------------------------------------------------------- Avalable NOL 23,992 14,562 5,132 - Equity Value @ $16.43 / share Federal Reserve Rate EBIT 59,390 61,429 62,239 Interest @ 10.9% 14,138 14,138 14,138 -------- ------- ------- EBT (before NOL) 45,252 47,292 48,101 Applied NOL 9,430 9,430 5,132 - Tax Savings @ 38.0% 3,583 3,583 1,950 - Present value factor @ 13.0% 40% 35% 31% 28% Residual Equity Return 2007 2008 2009 Value - -------------------------------------------------------------------------------------------- Unlevered Cash Flow 54,365 52,228 50,843 Interest @ 10.9% 14,138 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 5,372 -------- ------- ------- Equity Cash Flow (Before NOL) 45,599 43,462 42,078 --------- Present value factor @ 36.04% 10% 7% 5% $ 5,376 --------- Present value factor @ 31.55% 13% 10% 7% $ 8,591 --------- Present value factor @ 28.25% 15% 12% 9% $12,371 --------- Present value factor @ 25.70% 18% 14% 11% $16,619 --------- --------- Equity IRR @ $7.00 / share 36.0% --------- Equity IRR @ $8.00 / share 31.6% --------- Equity IRR @ $9.00 / share 28.3% --------- Equity IRR @ $10.00 / share 25.7% ---------
39 Valuation Summary ---------------------- Valuation Summary: Upside Case, Exit Refining ================================================================================ ($ thousands)
Crown Retail 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 - ---------------------------------------------------------------------------------------------------------------------------- EBITDA 32,756 35,230 35,805 36,391 36,985 37,589 38,203 38,828 39,462 40,106 Depreciation 12,904 10,091 8,780 8,665 7,699 7,135 7,338 7,660 8,126 8,622 Taxes @ 38.0% 7,544 9,553 10,270 10,536 11,129 11,573 11,729 11,844 11,908 11,964 Capital Expenditures 10,000 10,180 10,313 10,448 10,586 10,726 10,869 11,014 11,162 11,313 Cash Flow 15,212 15,497 15,223 15,406 15,270 15,290 15,606 15,970 16,392 16,829 --------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Present value factor @ 13.0% $ 127,733 94% 83% 74% 65% 58% 51% 45% 40% 35% 31% --------- Pasadena Refinery 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 - ---------------------------------------------------------------------------------------------------------------------------- EBITDA 42,633 61,104 61,017 62,240 62,747 63,497 64,002 64,148 37,008 - Depreciation 7,720 9,712 11,340 12,080 11,966 10,590 8,853 7,614 37,000 - Taxes @ 38.0% 13,267 19,529 18,877 19,061 19,297 20,105 20,957 21,483 3 - Capital Expenditures 15,704 24,050 13,400 13,460 8,850 4,000 3,016 2,032 - - ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Cash Flow 13,663 17,525 28,740 29,719 34,600 39,392 40,030 40,633 37,005 - --------- Present value factor @ 13.0% $ 155,497 94% 83% 74% 65% 58% 51% 45% 40% 35% 31% --------- La Gloria Refinery 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 - ---------------------------------------------------------------------------------------------------------------------------- EBITDA 18,684 27,787 27,104 26,583 26,000 25,548 25,702 24,926 24,119 23,282 Depreciation 3,840 4,942 6,886 8,901 10,566 12,949 16,489 17,690 16,840 16,589 Taxes @ 38.0% 5,641 8,681 7,683 6,719 5,865 4,788 3,501 2,750 2,766 2,543 Capital Expenditures 5,000 12,120 15,241 19,364 17,487 27,612 32,738 12,866 12,994 13,124 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Cash Flow 8,043 6,986 4,180 500 2,648 (6,851)(10,537) 9,311 8,359 7,615 --------- Present value factor @ 13.0% $ 36,376 94% 83% 74% 65% 58% 51% 45% 40% 35% 31% --------- Terminals (Crown and La Gloria) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 - ---------------------------------------------------------------------------------------------------------------------------- EBITDA 6,212 6,350 6,490 6,688 6,792 6,928 7,067 7,208 7,352 7,499 Depreciation 1,205 1,589 1,947 2,210 2,353 2,504 2,678 2,892 3,099 3,304 Taxes @ 38.0% 1,903 1,809 1,726 1,701 1,687 1,681 1,668 1,640 1,616 1,594 Capital Expenditures 3,280 3,100 3,325 2,375 3,020 3,080 3,142 3,205 3,269 3,334 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Cash Flow 1,030 1,441 1,439 2,611 2,086 2,166 2,257 2,363 2,467 2,571 --------- Present value factor @ 13.0% $ 16,708 94% 83% 74% 65% 58% 51% 45% 40% 35% 31% --------- Corporate 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 - ---------------------------------------------------------------------------------------------------------------------------- Wholesale Marketing Costs 2,200 2,240 2,280 2,321 2,363 2,405 2,449 2,493 2,537 2,583 Administration and Shared Services 12,000 12,216 12,436 12,660 12,888 13,120 13,356 13,596 13,841 9,393.34 Severence Costs 3,500 - - - - - - - - - Transaction Fees 3,500 - - - - - - - - - Corporate Depreciation 5,274 5,109 4,950 4,802 2,423 48 31 17 17 17 Tax Benefit @ 38.0% (10,060) (7,435) (7,473) (7,517) (6,716) (5,918) (6,017) (6,120) (6,230) (4,558) ------- ------ ------ ------ ------ ------ ------ ------ ------ ------ Cash Flow (11,140) (7,021) (7,243) (7,463) (8,534) (9,607) (9,787) (9,969) (10,148) (7,419) --------- Present value factor @ 13.0% $ (67,490) 94% 83% 74% 65% 58% 51% 45% 40% 35% 31% --------- Residual Crown Retail Value - ---------------------------------------------------- EBITDA Depreciation Taxes @ 38.0% Capital Expenditures Cash Flow --------- --------- Present value factor @ 13.0% $ 127,733 $ 38,137 --------- --------- Residual Pasadena Refinery Value - ----------------------------------------------------- EBITDA Depreciation Taxes @ 38.0% Capital Expenditures Cash Flow --------- --------- Present value factor @ 13.0% $ 155,497 $ - --------- --------- Residual La Gloria Refinery Value - ----------------------------------------------------- EBITDA Depreciation Taxes @ 38.0% Capital Expenditures Cash Flow --------- --------- Present value factor @ 13.0% $ 36,376 $ 17,255 --------- --------- Residual Terminals (Crown and La Gloria) Value - ----------------------------------------------------- EBITDA Depreciation Taxes @ 38.0% Capital Expenditures Cash Flow --------- --------- Present value factor @ 13.0% $ 16,708 $ 5,825 --------- --------- Residual Corporate Value - ----------------------------------------------------- Wholesale Marketing Costs Administration and Shared Services Severence Costs Transaction Fees Corporate Depreciation Tax Benefit @ 38.0% Cash Flow --------- --------- Present value factor @ 13.0% $ (67,490) $ (16,812) --------- ---------
40 Valuation Summary -------------------------- Valuation Summary: Upside Case, Exit Refining ================================================================================ ($ thousands)
Total, All Segments 2000 2001 2002 2003 2004 2005 2006 - ----------------------------------------------------------------------------------------------------------------------- EBITDA 79,086 116,015 115,701 116,921 117,274 118,038 119,171 Depreciation 30,944 31,443 33,904 36,658 35,007 33,225 35,389 Taxes @ 38.0% 18,294 32,137 31,083 30,500 31,261 32,229 31,837 Capital Expenditures 33,984 49,450 42,279 45,647 39,943 45,419 49,765 Unlevered Cash Flow 26,808 34,428 42,339 40,774 46,070 40,390 37,568 ------- ------- ------- ------- ------- -------- -------- -------- Present value factor @ 13.0% $268,825 94% 83% 74% 65% 58% 51% 45% -------- NOL Valuation 2000 2001 2002 2003 2004 2005 2006 - ----------------------------------------------------------------------------------------------------------------------- Available NOL 90,000 80,960 71,921 62,881 53,841 44,801 35,762 Equity Value @ $15.75 / share $158,592 Federal Reserve Rate 5.7% EBIT 48,141 84,572 81,797 80,262 82,267 84,813 83,782 Interest @ 10.9% 14,138 14,138 14,138 14,138 14,138 14,138 14,138 ------- ------- ------- ------- ------- -------- -------- EBT (before NOL) 34,004 70,435 67,660 66,125 68,130 70,675 69,644 Applied NOL 9,040 9,040 9,040 9,040 9,040 9,040 9,040 Tax Savings @ 38.0% 3,435 3,435 3,435 3,435 3,435 3,435 3,435 -------- Present value factor @ 13.0% $ 19,767 94% 83% 74% 65% 58% 51% 45% -------- Equity Return 2000 2001 2002 2003 2004 2005 2006 - ----------------------------------------------------------------------------------------------------------------------- Unlevered Cash Flow 26,808 34,428 42,339 40,774 46,070 40,390 37,568 Interest @ 10.9% 14,138 14,138 14,138 14,138 14,138 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 5,372 5,372 5,372 5,372 5,372 ------- ------- ------- ------- ------- -------- -------- Equity Cash Flow (Before NOL) 18,043 25,662 33,574 32,009 37,304 31,625 28,803 -------- Present value factor @ 48.31% $ 66,648 82% 55% 37% 25% 17% 11% 8% -------- Present value factor @ 42.18% $ 75,640 84% 59% 41% 29% 21% 14% 10% -------- Present value factor @ 37.38% $ 84,508 85% 62% 45% 33% 24% 17% 13% -------- Present value factor @ 33.50% $ 93,269 87% 65% 49% 36% 27% 20% 15% -------- Check -------- -------- NOL Value @ $7.00 / share; 48.31% $ 3,849 Equity Value @ $7.00 / share $ 70,497 $ 7.00 -------- -------- NOL Value @ $8.00 / share; 42.18% $ 4,928 Equity Value @ $8.00 / share $ 80,568 $ 8.00 -------- -------- NOL Value @ $9.00 / share; 37.38% $ 6,131 Equity Value @ $9.00 / share $ 90,639 $ 9.00 -------- -------- NOL Value @ $10.00 / share; 33.50% $ 7,441 Equity Value @ $10.00 / share $100,710 $ 10.00 -------- -------- Residual Total, All Segments 2007 2008 2009 Value - --------------------------------------------------------------------------------------- EBITDA 119,020 91,563 58,911 Depreciation 35,873 65,082 28,532 Taxes @ 38.0% 31,596 10,063 11,544 Capital Expenditures 29,117 27,425 27,771 -------- -------- -------- Unlevered Cash Flow 58,307 54,075 19,596 -------- Present value factor @ 13.0% 40% 35% 31% $ 44,405 -------- NOL Valuation 2007 2008 2009 2010 - --------------------------------------------------------------------------------------- Available NOL 26,722 17,682 8,643 - Equity Value @ $15.75 / share Federal Reserve Rate EBIT 83,147 26,480 30,379 Interest @ 10.9% 14,138 14,138 14,138 -------- -------- -------- EBT (before NOL) 69,010 12,343 16,242 Applied NOL 9,040 9,040 8,643 - Tax Savings @ 38.0% 3,435 3,435 3,284 - Present value factor @ 13.0% 40% 35% 31% 28% Residual Equity Return 2007 2008 2009 Value - --------------------------------------------------------------------------------------- Unlevered Cash Flow 58,307 54,075 19,596 Interest @ 10.9% 14,138 14,138 14,138 Tax Benefit @ 38.0% 5,372 5,372 5,372 -------- -------- -------- Equity Cash Flow (Before NOL) 49,542 45,309 10,830 -------- Present value factor @ 48.31% 5% 4% 2% $ 435 -------- Present value factor @ 42.18% 7% 5% 4% $ 761 -------- Present value factor @ 37.38% 9% 7% 5% $ 1,210 -------- Present value factor @ 33.50% 11% 9% 6% $ 1,797 -------- -------- Equity IRR @ $7.00 / share 48.3% -------- Equity IRR @ $8.00 / share 42.2% -------- Equity IRR @ $9.00 / share 37.4% -------- Equity IRR @ $10.00 / share 33.5% --------
41 Segment Valuation --------------------------- Crown Central Retail: Expected Case ================================================================================ PRO FORMA ECONOMICS
1999 Year through Total Crown: All Locations Ended 1998 Sept 2000 2001 2002 2003 2004 2005 2006 - ---------------------------------------------------------------------------------------------------------------------------------- (dollars per month per location, unless otherwise noted) Locations 327 327 327 327 327 327 327 327 327 Fuel sales (gpm) 129,407 122,902 128,970 135,245 137,544 139,882 142,260 144,679 147,138 Fuel margin (cpg) 10.76c 8.32c 10.48c 10.51c 10.51c 10.51c 10.51c 10.51c 10.51c -------- -------- -------- -------- -------- -------- -------- -------- ------- Fuel gross profit 13,921 10,231 13,515 14,217 14,459 14,704 14,954 15,209 15,467 Merchandise sales 25,376 27,363 27,855 28,357 28,867 29,387 29,916 30,454 31,002 Merchandise margin (%) 29% 30% 31% 31% 31% 31% 31% 31% 31% -------- -------- -------- -------- -------- -------- -------- ------- ------- Merchandise gross profit 7,433 8,211 8,635 8,791 8,949 9,110 9,274 9,441 9,611 Other gross profit 3,029 3,391 3,452 3,514 3,577 3,642 3,707 3,774 3,842 Manageable 749 687 700 712 725 738 751 765 779 Personnel 6,992 7,276 7,407 7,540 7,676 7,814 7,954 8,098 8,243 Advertising 186 81 83 84 86 87 89 91 92 Rentals 1,774 2,012 2,048 2,085 2,123 2,161 2,200 2,239 2,280 Utilities 1,044 1,108 1,128 1,148 1,169 1,190 1,211 1,233 1,255 Proprietary maintenance 144 184 187 191 194 198 201 205 208 Contract maintenance 1,074 906 923 939 956 973 991 1,009 1,027 Taxes 690 655 667 679 691 704 716 729 742 Miscellaneous expense 999 969 987 1,004 1,022 1,041 1,060 1,079 1,098 Environmental expense 134 138 466 474 483 491 500 509 518 -------- -------- -------- -------- -------- -------- -------- ------- ------- Total expenses 13,785 14,017 14,595 14,857 15,125 15,397 15,674 15,956 16,243 Marketing divisional allocation 4,544 4,865 3,165 3,221 3,279 3,338 3,399 3,460 3,522 Corporate divisional allocation 2,660 2,559 - - - - - - - -------- -------- -------- -------- -------- -------- -------- ------- ------- Total allocated expenses 7,204 7,424 3,165 3,221 3,279 3,338 3,399 3,460 3,522 EBITDA 3,395 392 7,843 8,443 8,581 8,721 8,863 9,007 9,154 Store depreciation 2,096 2,351 3,161 2,200 1,642 1,407 973 657 542 Marketing and corporate DD&A - - - - - - - - - Sustaining capital deprecation 127 372 596 801 989 1,162 1,328 -------- -------- -------- --------- -------- ------- ------- EBIT 4,555 5,871 6,343 6,512 6,901 7,189 7,284 Taxes 1,731 2,231 2,410 2,475 2,622 2,732 2,768 Sustaining capital 2,548 2,594 2,628 2,663 2,698 2,733 2,770 -------- -------- -------- --------- -------- ------- ------- Cash Flow 3,564 3,617 3,542 3,583 3,543 3,542 3,616 Cash Flow (per store per year) 42,769 43,409 42,505 42,998 42,513 42,504 43,397 Present value factor @ 13.0% $356,498 94% 83% 74% 65% 58% 51% 45% (thousand dollars per year all 327 locations) EBITDA 30,777 33,130 33,670 34,219 34,778 35,345 35,922 Depreciation 12,904 10,091 8,780 8,665 7,699 7,135 7,338 -------- -------- -------- --------- -------- ------- ------- EBIT 17,873 23,039 24,890 25,555 27,079 28,210 28,584 Taxes @ 38.0% 6,792 8,755 9,458 9,711 10,290 10,720 10,862 Capital expenditures 10,000 10,180 10,313 10,448 10,586 10,726 10,869 -------- -------- -------- --------- -------- ------- ------- Cash Flow 13,985 14,195 13,899 14,060 13,902 13,899 14,191 Present value factor @ 13.0% $116,575 94% 83% 74% 65% 58% 51% 45% Terminal Total Crown: All Locations 2007 2008 2009 Value - ------------------------------------------------------------------------------------ (dollars per month per location, unless otherwise noted) Locations 327 327 327 Fuel sales (gpm) 149,640 152,183 154,770 Fuel margin (cpg) 10.51c 10.51c 10.51c -------- -------- -------- Fuel gross profit 15,730 15,997 16,269 Merchandise sales 31,560 32,128 32,707 Merchandise margin (%) 31% 31% 31% -------- -------- -------- Merchandise gross profit 9,784 9,960 10,139 Other gross profit 3,911 3,982 4,053 Manageable 793 807 821 Personnel 8,392 8,543 8,697 Advertising 94 96 97 Rentals 2,321 2,362 2,405 Utilities 1,278 1,301 1,324 Proprietary maintenance 212 216 220 Contract maintenance 1,046 1,064 1,083 Taxes 756 769 783 Miscellaneous expense 1,118 1,138 1,158 Environmental expense 528 537 547 -------- -------- -------- Total expenses 16,536 16,833 17,136 Marketing divisional allocation 3,585 3,650 3,716 Corporate divisional allocation - - - -------- -------- -------- Total allocated expenses 3,585 3,650 3,716 EBITDA 9,304 9,455 9,610 Store depreciation 455 403 356 Marketing and corporate DD&A - - - Sustaining capital deprecation 1,497 1,668 1,841 -------- -------- -------- EBIT 7,352 7,385 7,412 Taxes 2,794 2,806 2,817 Sustaining capital 2,807 2,845 2,883 -------- -------- -------- Cash Flow 3,703 3,805 3,910 Cash Flow (per store per year) 44,438 45,656 46,919 Present value factor @ 13.0% 40% 35% 31% $ 106,321 (thousand dollars per year all 327 locations) EBITDA 36,507 37,103 37,708 Depreciation 7,660 8,126 8,622 -------- -------- -------- EBIT 28,848 28,977 29,086 Taxes @ 38.0% 10,962 11,011 11,053 Capital expenditures 11,014 11,162 11,313 -------- -------- -------- Cash Flow 14,531 14,929 15,342 Present value factor @ 13.0% 40% 35% 31% $ 34,767
42 Segment Valuation --------------------------- Crown Central Retail: Real Estate Valuation ================================================================================ ($ THOUSANDS)
Total Crown: Real Estate Valuation 2000 2001 - --------------------------------------------------------------------------------------------------------------------- (thousand dollars per year all 327 locations) EBITDA 30,777 16,565 Depreciation 12,904 5,045 ----------------------------------- EBIT 17,873 11,519 Present Value ----------------------------------- Taxes @ 38.0% 6,792 4,377 11% 13% 15% ----------------------------------- Capital expenditures 10,000 5,090 Cash Flow 13,985 7,097 $ 19,343 $ 19,065 $ 18,797 Lease Business Divesture Locations 56 56 Hi Value @ 11.0% $ 190 / site 10,647 10,647 $ 18,232 $ 17,760 $ 17,308 Mid Value @ 13.0% $ 162 / site 9,068 9,068 $ 15,530 $ 15,127 $ 14,742 Low Value @ 15.0% $ 141 / site 7,919 7,919 $ 13,562 $ 13,210 $ 12,874 Fee Business Divesture Locations 108 107 Hi Value $ 700 / site 75,600 74,900 $ 128,899 $ 125,560 $ 122,374 Mid Value $ 650 / site 70,200 69,550 $ 119,692 $ 116,592 $ 113,633 Low Value $ 600 / site 64,800 64,200 $ 110,485 $ 107,623 $ 104,892 Tax Basis $ 323.62 / site 53,074 52,750 Taxes @ 38.0% Hi Value 12,606 12,463 $ 21,471 $ 20,915 $ 20,385 Mid Value 9,954 9,830 $ 16,946 $ 16,507 $ 16,088 Low Value 7,465 7,360 $ 12,699 $ 12,370 $ 12,057 Total Value --------- Hi Value $ 145,003 $ 141,469 $ 138,094 --------------------- Mid Value $ 137,619 $ 134,277 $ 131,084 ----------------------- Low Value $ 130,690 $ 127,528 $ 124,506 -----------------------------------
43 Segment Valuation --------------------- Pasadena Refinery: Expected Case, Continue Refining ================================================================================ CHARGES AND YIELDS (THOUSAND BARRELS PER DAY)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 - ---------------------------------------------------------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 16.7 19.3 18.8 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 Foreign Light Sweet 48.2 28.8 41.2 21.4 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 Foreign Heavy Sweet 20.3 19.3 17.3 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 Foreign Medium Sour 4.9 3.9 1.5 - - - - - - - - - Statoil Heidrun Processing - 10.9 4.7 34.0 34.2 34.2 34.2 34.2 34.2 34.2 34.2 34.2 Atmospheric Resid - 1.4 6.3 12.9 13.0 13.0 13.0 13.0 13.0 13.0 13.0 13.0 Total Crude & Condensate 90.0 83.6 89.7 79.4 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 Blendstocks FCC Charge Stock 8.3 15.5 5.2 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 Normal Butane 1.3 1.5 1.2 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 Iso Butane 2.4 2.2 3.5 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 Unfinished Naphtha - 1.1 0.6 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 Natural Gasoline 0.6 2.1 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 MTBE 0.3 0.6 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 Total Blendstocks 12.9 23.1 13.1 12.0 12.1 12.1 12.1 12.1 12.1 12.1 12.1 12.1 Total Input 102.9 106.7 102.8 91.3 92.1 92.1 92.1 92.1 92.1 92.1 92.1 92.1 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 12.3 11.6 19.4 18.1 18.3 18.3 18.3 18.3 18.3 18.3 18.3 18.3 Unleaded Regular 44.8 46.2 37.8 32.7 33.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0 Reformulated Gasoline 1.2 - 0.1 - - - - - - - - - Subgrade Unleaded - 2.4 1.9 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 Components (0.7) (0.4) (0.4) - - - - - - - - - Total Gasoline & Gasoline 57.6 59.9 58.9 54.2 54.6 54.6 54.6 54.6 54.6 54.6 54.6 54.6 Blendstocks Distillates Low Sulfur Diesel - - - - - - - - - - - - No. 2 Fuel Oil 30.1 32.4 29.0 26.0 26.8 26.8 26.8 26.8 26.8 26.8 26.8 26.8 Light Cycle Oil - 1.5 1.2 0.6 - - - - - - - - Total Distillates 33.3 33.9 30.1 26.6 26.8 26.8 26.8 26.8 26.8 26.8 26.8 26.8 Other Products Mixed Butanes 0.5 0.5 1.4 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Slurry 2.5 3.0 2.7 2.4 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Benzene Extract 0.1 - 0.4 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Propane 2 2.1 2.2 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Propylene 2.6 3.1 3.0 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 Green Coke 1.9 1.8 1.8 1.7 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 Sulfur 0.0 0.1 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Intermediate Products 0.2 1.5 0.6 - - - - - - - - - Total Other 10.2 12.0 12.3 10.2 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3 Total Products 101.1 105.8 101.2 91.0 91.7 91.7 91.7 91.7 91.7 91.7 91.7 91.7 - ---------------------------------------------------------------------------------------------------------------------------------
2008 2009 - -------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 10.0 10.0 Foreign Light Sweet 21.6 21.6 Foreign Heavy Sweet 1.1 1.1 Foreign Medium Sour - - Statoil Heidrun Processing 34.2 34.2 Atmospheric Resid 13.0 13.0 Total Crude & Condensate 80.0 80.0 Blendstocks FCC Charge Stock 4.7 4.7 Normal Butane 1.3 1.3 Iso Butane 2.6 2.6 Unfinished Naphtha 1.1 1.1 Natural Gasoline 1.3 1.3 MTBE 1.1 1.1 Total Blendstocks 12.1 12.1 Total Input 92.1 92.1 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 18.3 18.3 Unleaded Regular 33.0 33.0 Reformulated Gasoline - - Subgrade Unleaded 3.3 3.3 Components - - Total Gasoline & Gasoline Blendstocks 54.6 54.6 Distillates Low Sulfur Diesel 26.8 26.8 No. 2 Fuel Oil - - Light Cycle Oil - - Total Distillates 26.8 26.8 Other Products Mixed Butanes 1.0 1.0 Slurry 2.5 2.5 Benzene Extract 0.2 0.2 Propane 2.0 2.0 Propylene 2.8 2.8 Green Coke 1.8 1.8 Sulfur 0.1 0.1 Intermediate Products - - Total Other 10.3 10.3 Total Products 91.7 91.7 - -----------------------------------------------------
44 Segment Valuation --------------------- Pasadena Refinery: Expected Case, Continue Refining ================================================================================ FEEDSTOCK AND PRODUCT PRICES (DOLLARS PER BARREL)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ---------------------------------------------------------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 22.26 21.14 15.05 16.33 18.78 16.53 16.89 17.26 17.63 18.01 18.40 Foreign Light Sweet 22.80 21.00 14.57 18.29 22.19 19.98 20.33 20.69 21.05 21.42 21.79 Foreign Heavy Sweet 21.91 19.42 13.15 12.05 14.51 12.22 12.50 12.77 13.06 13.34 13.64 Statoil Type Crude - 20.94 10.93 18.15 20.86 18.50 18.83 19.17 19.52 19.87 20.23 Atmospheric Resid - 19.96 14.22 18.42 16.25 13.64 13.87 14.02 14.25 14.50 14.75 Blendstocks FCC Charge Stock 23.92 21.79 15.96 23.58 21.28 19.54 19.85 20.02 20.35 20.69 21.03 Normal Butane 19.58 20.42 15.25 19.81 18.81 17.23 17.51 17.78 18.06 18.32 18.61 Iso Butane 20.72 20.00 13.75 17.35 19.58 18.02 18.31 18.60 18.89 19.17 19.46 Unfinished Naphtha - 22.50 17.07 23.21 21.31 19.45 19.79 20.17 20.55 20.97 21.36 Natural Gasoline 21.52 20.29 15.20 17.73 16.97 15.07 15.37 15.70 16.03 16.41 16.76 MTBE 35.15 35.55 28.17 28.43 34.59 33.03 33.57 34.09 34.62 35.13 35.68 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 26.32 26.29 19.08 23.21 27.01 25.11 25.52 25.96 26.41 26.90 27.08 Unleaded Regular 25.06 24.66 17.52 22.83 25.02 23.20 23.58 23.99 24.41 24.87 25.04 Subgrade Unleaded - 22.60 16.83 20.62 24.81 22.99 23.36 23.77 24.19 24.65 24.82 Distillates Low Sulfur Diesel 25.41 23.20 16.79 20.42 23.50 21.92 22.28 22.62 22.97 23.31 23.43 No. 2 Fuel Oil 24.88 22.49 15.71 19.84 22.63 21.25 21.60 21.93 22.27 22.60 22.71 Other Products Mixed Butanes 15.86 15.48 10.69 13.04 18.81 17.23 17.51 17.78 18.06 18.32 18.42 Slurry 16.18 14.86 10.54 14.35 17.36 15.57 15.83 16.07 16.32 16.56 16.65 Benzene Extract 12.70 - 15.67 18.27 24.81 22.99 23.36 23.77 24.19 24.65 24.82 Propane 17.71 15.68 10.61 14.56 16.06 14.57 14.81 15.04 15.28 15.50 15.58 Propylene 25.67 29.42 18.07 20.29 22.94 21.53 21.83 22.13 22.44 22.73 22.81 Green Coke 19.36 16.26 14.76 8.51 6.79 3.83 3.81 3.80 3.78 3.77 3.71 Intermediate Products 47.82 25.13 11.48 - - - - - - - -
2007 2008 2009 - ------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 18.80 19.21 19.62 Foreign Light Sweet 22.17 22.56 22.96 Foreign Heavy Sweet 13.94 14.25 15.23 Statoil Type Crude 20.60 20.97 21.35 Atmospheric Resid 15.00 15.25 15.50 Blendstocks FCC Charge Stock 21.36 21.70 22.05 Normal Butane 18.92 19.23 19.54 Iso Butane 19.78 20.11 20.44 Unfinished Naphtha 21.74 22.12 22.51 Natural Gasoline 17.09 17.42 17.77 MTBE 36.27 36.87 37.47 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 27.24 27.42 27.60 Unleaded Regular 25.19 25.35 25.52 Subgrade Unleaded 24.97 25.13 25.30 Distillates Low Sulfur Diesel 23.57 23.72 23.88 No. 2 Fuel Oil 22.85 23.00 23.15 Other Products Mixed Butanes 18.53 18.65 18.77 Slurry 16.75 16.86 16.97 Benzene Extract 24.97 25.13 25.30 Propane 15.68 15.78 15.88 Propylene 22.90 23.00 23.10 Green Coke 3.66 3.61 3.55 Intermediate Products - - - - -------------------------------------------------------------------
45 Segment Valuation ------------------------- Pasadena Refinery: Expected Case, Continue Refining ================================================================================ GROSS MARGIN ($ MILLIONS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 ---------------------------------------------------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 135.4 149.3 103.3 59.4 68.9 60.6 61.9 63.3 64.7 Foreign Light Sweet 400.9 220.7 218.9 142.8 174.6 157.2 159.9 162.7 165.6 Foreign Heavy Sweet 162.7 136.8 83.0 5.0 6.1 5.1 5.2 5.3 5.5 Foreign Medium Sour 37.5 27.0 8.5 - - - - - - Statoil Type Crude - 83.3 18.6 225.0 260.6 231.0 235.2 239.5 243.8 Atmospheric Resid - 10.2 32.6 86.9 77.3 64.9 66.0 66.6 67.8 Total Crude & Condensate 736.5 627.4 464.9 519.0 587.4 518.8 528.3 537.5 547.3 Blendstocks FCC Charge Stock 72.8 123.6 30.4 40.1 36.5 33.5 34.0 34.3 34.9 Normal Butane 9.0 11.4 6.4 9.3 8.9 8.2 8.3 8.4 8.6 Iso Butane 17.9 16.2 17.5 16.4 18.7 17.2 17.4 17.7 18.0 Unfinished Naphtha - 9.0 3.7 9.2 8.5 7.8 7.9 8.1 8.2 Natural Gasoline 4.7 15.4 7.3 8.1 7.8 6.9 7.1 7.2 7.4 MTBE 4.1 7.8 12.8 11.4 14.0 13.4 13.6 13.8 14.0 Total Blendstocks 108.5 183.9 78.8 94.5 94.4 86.9 88.3 89.5 91.0 Total Input 844.9 811.3 543.7 613.5 681.8 605.7 616.6 627.0 638.3 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 118.5 111.6 134.9 153.5 180.0 167.4 170.1 173.1 176.1 Unleaded Regular 409.8 415.9 241.8 272.7 301.2 279.3 283.9 288.8 293.9 Subgrade Unleaded - 20.2 11.8 25.0 30.3 28.0 28.5 29.0 29.5 Total Gasoline & Gasoline Blendstocks 533.3 544.6 385.5 451.1 511.5 474.7 482.5 490.9 499.5 Distillates Low Sulfur Diesel - - - - - - - - - No. 2 Fuel Oil 273.6 266.0 166.1 188.4 221.6 208.1 211.4 214.7 218.1 Total Distillates 301.6 276.9 172.4 192.1 221.6 208.1 211.4 214.7 218.1 Other Products Mixed Butanes 3.1 2.9 5.4 4.7 6.9 6.3 6.4 6.5 6.6 Slurry 14.8 16.0 10.2 12.8 15.6 14.0 14.2 14.5 14.7 Benzene Extract 0.3 - 2.0 1.0 1.4 1.3 1.3 1.3 1.3 Propane 14.7 11.8 8.6 10.7 11.9 10.8 11.0 11.2 11.3 Propylene 24.8 33.2 19.5 20.9 23.9 22.4 22.7 23.0 23.3 Green Coke 13.4 10.6 9.6 5.4 4.4 2.5 2.4 2.4 2.4 Intermediate Products 3.9 14.0 2.7 - - - - - - Total Other 74.9 88.8 59.4 56.0 64.6 57.9 58.7 59.6 60.4 Total Products 909.8 910.2 617.3 699.2 797.7 740.7 752.7 765.2 777.9 Gross Margin 64.8 99.0 73.6 85.7 115.9 135.0 136.1 138.2 139.6 2005 2006 2007 2008 2009 --------------------------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 66.1 67.5 69.0 70.4 72.0 Foreign Light Sweet 168.5 171.4 174.5 177.5 180.6 Foreign Heavy Sweet 5.6 5.7 5.8 6.0 6.4 Foreign Medium Sour - - - - - Statoil Type Crude 248.2 252.7 257.3 262.0 266.7 Atmospheric Resid 69.0 70.1 71.3 72.5 73.7 Total Crude & Condensate 557.3 567.5 577.8 588.4 599.4 Blendstocks FCC Charge Stock 35.5 36.0 36.6 37.2 37.8 Normal Butane 8.7 8.8 9.0 9.1 9.3 Iso Butane 18.3 18.5 18.9 19.2 19.5 Unfinished Naphtha 8.4 8.5 8.7 8.8 9.0 Natural Gasoline 7.6 7.7 7.9 8.0 8.2 MTBE 14.2 14.4 14.7 14.9 15.2 Total Blendstocks 92.6 94.1 95.7 97.2 98.9 Total Input 649.9 661.6 673.5 685.6 698.2 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 179.3 180.5 181.6 182.8 184.0 Unleaded Regular 299.4 301.4 303.2 305.2 307.3 Subgrade Unleaded 30.1 30.3 30.5 30.7 30.9 Total Gasoline & Gasoline Blendstocks 508.7 512.2 515.3 518.7 522.1 Distillates Low Sulfur Diesel - - - 232.2 233.8 No. 2 Fuel Oil 221.3 222.4 223.7 - - Total Distillates 221.3 222.4 223.7 232.2 233.8 Other Products Mixed Butanes 6.7 6.8 6.8 6.8 6.9 Slurry 14.9 15.0 15.1 15.2 15.3 Benzene Extract 1.4 1.4 1.4 1.4 1.4 Propane 11.5 11.6 11.6 11.7 11.8 Propylene 23.6 23.7 23.8 23.9 24.0 Green Coke 2.4 2.4 2.3 2.3 2.3 Intermediate Products - - - - - Total Other 61.2 61.5 61.7 62.1 62.4 Total Products 791.2 796.0 800.7 813.0 818.3 Gross Margin 141.4 134.5 127.3 127.4 120.1
46 Segment Valuation ------------------------- Pasadena Refinery: Expected Case, Continue Refining ============================================================================== OPERATING COSTS ($ MILLIONS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 -------------------------------------------------------------------------------------------------------------------------------- Variable Costs Variable O & O Costs 19.4 21.6 19.8 19.8 21.8 22.1 22.8 23.2 23.5 23.9 24.1 24.4 24.7 25.0 Crude Throughput, MBbls/D 90.0 83.6 89.7 79.4 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 Variable Costs, $/Bbl 0.59 0.71 0.61 0.68 0.75 0.76 0.78 0.79 0.81 0.82 0.83 0.84 0.85 0.85 Fixed Costs Taxes other than Income Tax & Insurance 6.2 6.2 5.8 5.8 5.8 5.9 6.0 6.1 6.3 6.6 6.9 7.3 7.8 8.4 Fixed O & O Costs 38.6 40.9 43.6 43.6 43.6 43.9 44.3 44.6 45.0 45.4 45.7 46.1 46.5 46.8 Additional Diesel Hydrotreating Costs - - - - - - - - - - - - 8.0 8.0 Less Cost Reductions -0.65 -0.66 -0.67 -0.68 -0.68 -0.69 -0.70 -0.70 -0.71 Total Operating Costs 64.2 68.7 69.3 69.3 71.2 71.3 72.5 73.3 74.2 75.1 76.1 77.1 86.2 87.5
47 Segment Valuation ----------------------- Pasadena Refinery: Expected Case, Continue Refining - -------------------------------------------------------------------------------- CAPITAL COSTS ($ MILLIONS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 - ------------------------------------------------------------------------------------------------------------------------------------ Capital Expenditures Mandatory Environmental & Safety 5.1 3.3 5.1 8.9 2.8 1.3 1.0 1.0 0.5 3.3 3.3 3.3 3.3 3.4 Other Stay In Business 3.3 4.2 1.0 1.8 1.0 2.3 2.3 2.3 2.3 2.3 Turnaround Capital 0.9 10.2 2.5 6.7 8.3 13.8 8.1 1.7 4.4 6.3 6.4 6.4 6.5 6.5 Additional Unspecified Capital 2.0 2.0 Discretionary 1.1 4.8 0.5 3 5.8 3.1 3.1 3.1 3.1 3.2 Low Sulfur-Gasoline 0.2 2.8 9.0 3.0 Ultra Low Sulfur-Diesel 30.0 50.0 20.0 NOx RACT II 10.0 10.0 Total Capital Expenditures 6.0 13.5 7.6 15.6 15.7 24.1 13.4 18.5 46.7 74.9 45.0 15.1 15.3 15.4
48 Segment Valuation ----------------------- Pasadena Refinery: Expected Case, Continue Refining - ------------------------------------------------------------------------------- PRO FORMA ECONOMICS ($ MILLIONS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 - ----------------------------------------------------------------------------------------------------------------------------------- Product Revenues 909.8 910.2 617.3 699.2 797.7 740.7 752.7 765.2 777.9 Raw Materials 844.9 811.3 543.7 613.5 681.8 605.7 616.6 627.0 638.3 Gross Margin, $/Bbl Feed 1.73 2.54 1.96 2.57 3.45 4.02 4.05 4.11 4.15 Margin Adjustment, $/Bbl - - - - - - - - - Margin After Adjustment, $/Bbl 1.73 2.54 1.96 2.57 3.45 4.02 4.05 4.11 4.15 Gross Margin 64.8 99.0 73.6 85.7 115.9 135.0 136.1 138.2 139.6 Operating & Overhead Costs 64.2 68.7 69.3 69.3 71.2 71.3 72.5 73.3 74.2 Operating Costs 64.2 68.7 69.3 69.3 71.2 71.3 72.5 73.3 74.2 GATX, Alloc S&T for Cost of Running Bulk Sales, Franchise Tax (1.0) (0.9) (0.4) (0.8) (0.8) (0.8) (0.8) (0.8) Interest on Working Capital (1.2) (1.7) (1.7) (1.7) (1.7) Net Margin 0.6 29.3 3.4 16.0 42.8 61.2 61.2 62.4 62.9 Depreciation 10.8 10.7 10.6 10.6 7.7 9.7 11.3 12.6 16.6 Income Before Taxes (10.2) 18.6 (7.1) 5.5 35.1 51.5 49.8 49.8 46.2 Income Taxes (3.9) 7.1 (2.7) 2.1 13.3 19.6 18.9 18.9 17.6 Income After Taxes (6.3) 11.5 (4.4) 3.4 21.7 32.0 30.9 30.9 28.7 Depreciation Add-Back 10.8 10.7 10.6 10.6 7.7 9.7 11.3 12.6 16.6 Gross Cash Flow 4.5 22.2 6.1 13.9 29.5 41.7 42.2 43.5 45.3 Capital Spending 6.0 13.5 7.6 15.6 15.7 24.1 13.4 18.5 46.7 Net Cash Flow (Incl Terminal Value) (1.5) 8.7 (1.5) (1.7) 13.7 17.6 28.8 25.0 (1.3) Net Present Value @ 13% 104 End 2005 2006 2007 2008 2009 Value - ----------------------------------------------------------------------------------------------------------------------- Product Revenues 791.2 796.0 800.7 813.0 818.3 Raw Materials 649.9 661.6 673.5 685.6 698.2 Gross Margin, $/Bbl Feed 4.21 4.00 3.79 3.79 3.57 Margin Adjustment, $/Bbl - - - - - Margin After Adjustment, $/Bbl 4.21 4.00 3.79 3.79 3.57 Gross Margin 141.4 134.5 127.3 127.4 120.1 Operating & Overhead Costs 75.1 76.1 77.1 86.2 87.5 Operating Costs 75.1 76.1 77.1 86.2 87.5 GATX, Alloc S&T for Cost of Running Bulk Sales, (0.8) (0.8) (0.8) (0.8) (0.8) Franchise Tax Interest on Working Capital (1.8) (1.8) (1.8) (1.9) (1.9) Net Margin 63.6 55.7 47.5 38.5 29.8 Depreciation 25.2 31.8 31.5 28.7 26.9 Income Before Taxes 38.4 23.9 16.0 9.8 3.0 Income Taxes 14.6 9.1 6.1 3.7 1.1 Income After Taxes 23.8 14.8 9.9 6.0 1.8 Depreciation Add-Back 25.2 31.8 31.5 28.7 26.9 Gross Cash Flow 49.0 46.7 41.4 34.8 28.7 Capital Spending 74.9 45.0 15.1 15.3 15.4 Net Cash Flow (Incl Terminal Value) (25.9) 1.6 26.3 19.5 13.3 103 Net Present Value @
49 Segment Valuation ------------------------- Pasadena Refinery: Expected Case, Exit Refining ================================================================================ CHARGES AND YIELDS (THOUSAND BARRELS PER DAY)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 - ----------------------------------------------------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 16.7 19.3 18.8 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 Foreign Light Sweet 48.2 28.8 41.2 21.4 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 Foreign Heavy Sweet 20.3 19.3 17.3 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 Foreign Medium Sour 4.9 3.9 1.5 - - - - - - - - - Statoil Heidrun Processing - 10.9 4.7 34.0 34.2 34.2 34.2 34.2 34.2 34.2 34.2 34.2 Atmospheric Resid - 1.4 6.3 12.9 13.0 13.0 13.0 13.0 13.0 13.0 13.0 13.0 Total Crude & Condensate 90.0 83.6 89.7 79.4 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 Blendstocks FCC Charge Stock 8.3 15.5 5.2 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 Normal Butane 1.3 1.5 1.2 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 Iso Butane 2.4 2.2 3.5 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 Unfinished Naphtha - 1.1 0.6 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 Natural Gasoline 0.6 2.1 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 MTBE 0.3 0.6 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 Total Blendstocks 12.9 23.1 13.1 12.0 12.1 12.1 12.1 12.1 12.1 12.1 12.1 12.1 Total Input 102.9 106.7 102.8 91.3 92.1 92.1 92.1 92.1 92.1 92.1 92.1 92.1 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 12.3 11.6 19.4 18.1 18.3 18.3 18.3 18.3 18.3 18.3 18.3 18.3 Unleaded Regular 44.8 46.2 37.8 32.7 33.0 33.0 33.0 33.0 33.0 33.0 33.0 33.0 Subgrade Unleaded - 2.4 1.9 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 Total Gasoline & Gasoline Blendstocks 57.6 59.9 58.9 54.2 54.6 54.6 54.6 54.6 54.6 54.6 54.6 54.6 Distillates Low Sulfur Diesel No. 2 Fuel Oil 30.1 32.4 29.0 26.0 26.8 26.8 26.8 26.8 26.8 26.8 26.8 26.8 Light Cycle Oil - 1.5 1.2 0.6 - - - - - - - Total Distillates 33.3 33.9 30.1 26.6 26.8 26.8 26.8 26.8 26.8 26.8 26.8 26.8 Other Products Mixed Butanes 0.5 0.5 1.4 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Slurry 2.5 3.0 2.7 2.4 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Benzene Extract 0.1 - 0.4 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Propane 2 2.1 2.2 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Propylene 2.6 3.1 3.0 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 Green Coke 1.9 1.8 1.8 1.7 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 Intermediate Products 0.2 1.5 0.6 (0.3) - - - - - - - - Total Other 10.2 12.0 12.3 9.9 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3 Total Products 101.1 105.8 101.2 90.7 91.7 91.7 91.7 91.7 91.7 91.7 91.7 91.7
50 Segment Valuation ------------------------- Pasadena Refinery: Expected Case, Exit Refining ================================================================================ FEEDSTOCK AND PRODUCT PRICES (DOLLARS PER BARREL)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 - ----------------------------------------------------------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 22.26 21.14 15.05 16.33 18.78 16.53 16.89 17.26 17.63 18.01 18.40 18.80 19.21 19.62 Foreign Light Sweet 22.80 21.00 14.57 18.29 22.19 19.98 20.33 20.69 21.05 21.42 21.79 22.17 22.56 22.96 Foreign Heavy Sweet 21.91 19.42 13.15 12.05 14.51 12.22 12.50 12.77 13.06 13.34 13.64 13.94 14.25 15.23 Statoil Type Crude - 20.94 10.93 18.15 20.86 18.50 18.83 19.17 19.52 19.87 20.23 20.60 20.97 21.35 Atmospheric Resid - 19.96 14.22 18.42 16.25 13.64 13.87 14.02 14.25 14.50 14.75 15.00 15.25 15.50 Blendstocks FCC Charge Stock 23.92 21.79 15.96 23.58 21.28 19.54 19.85 20.02 20.35 20.69 21.03 21.36 21.70 22.05 Normal Butane 19.58 20.42 15.25 19.81 18.81 17.23 17.51 17.78 18.06 18.32 18.61 18.92 19.23 19.54 Iso Butane 20.72 20.00 13.75 17.35 19.58 18.02 18.31 18.60 18.89 19.17 19.46 19.78 20.11 20.44 Unfinished Naphtha - 22.50 17.07 23.21 21.31 19.45 19.79 20.17 20.55 20.97 21.36 21.74 22.12 22.51 Natural Gasoline 21.52 20.29 15.20 17.73 16.97 15.07 15.37 15.70 16.03 16.41 16.76 17.09 17.42 17.77 MTBE 35.15 35.55 28.17 28.43 34.59 33.03 33.57 34.09 34.62 35.13 35.68 36.27 36.87 37.47 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 26.32 26.29 19.08 23.21 27.01 25.11 25.52 25.96 26.41 26.90 27.08 27.24 27.42 27.60 Unleaded Regular 25.06 24.66 17.52 22.83 25.02 23.20 23.58 23.99 24.41 24.87 25.04 25.19 25.35 25.52 Subgrade Unleaded - 22.60 16.83 20.62 24.81 22.99 23.36 23.77 24.19 24.65 24.82 24.97 25.13 25.30 Distillates Low Sulfur Diesel 23.29 21.71 22.06 22.40 23.50 21.92 22.28 22.62 22.97 23.31 23.43 23.57 23.72 23.88 No. 2 Fuel Oil 24.88 22.49 15.71 19.84 22.63 21.25 21.60 21.93 22.27 22.60 22.71 22.85 23.00 23.15 Other Products Mixed Butanes 15.86 15.48 10.69 13.04 18.81 17.23 17.51 17.78 18.06 18.32 18.42 18.53 18.65 18.77 Slurry 16.18 14.86 10.54 14.35 17.36 15.57 15.83 16.07 16.32 16.56 16.65 16.75 16.86 16.97 Benzene Extract 12.70 - 15.67 18.27 24.81 22.99 23.36 23.77 24.19 24.65 24.82 24.97 25.13 25.30 Propane 17.71 15.68 10.61 14.56 16.06 14.57 14.81 15.04 15.28 15.50 15.58 15.68 15.78 15.88 Propylene 25.67 29.42 18.07 20.29 22.81 21.39 21.70 22.00 22.30 22.60 22.81 22.90 23.00 23.10 Green Coke 19.36 16.26 14.76 8.51 6.79 3.83 3.81 3.80 3.78 3.77 3.71 3.66 3.61 3.55 Intermediate Products 47.82 25.13 11.48 - - - - - - - 0.00 0.00 0.00 0.00
51 Segment Valuation ------------------------------ Pasadena Refinery: Expected Case, Continue Refining - -------------------------------------------------------------------------------- GROSS MARGIN ($ MILLIONS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ---------------------------------------------------------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 135.4 149.3 103.3 59.4 68.9 60.6 61.9 63.3 64.7 66.1 67.5 Foreign Light Sweet 400.9 220.7 218.9 142.8 174.6 157.2 159.9 162.7 165.6 168.5 171.4 Foreign Heavy Sweet 162.7 136.8 83.0 5.0 6.1 5.1 5.2 5.3 5.5 5.6 5.7 Foreign Medium Sour 37.5 27.0 8.5 - - - - - - - - Statoil Type Crude - 83.3 18.6 225.0 260.6 231.0 235.2 239.5 243.8 248.2 252.7 Atmospheric Resid - 10.2 32.6 86.9 77.3 64.9 66.0 66.6 67.8 69.0 70.1 Total Crude & Condensate 736.5 627.4 464.9 519.0 587.4 518.8 528.3 537.5 547.3 557.3 567.5 Blendstocks FCC Charge Stock 72.8 123.6 30.4 40.1 36.5 33.5 34.0 34.3 34.9 35.5 36.0 Normal Butane 9.0 11.4 6.4 9.3 8.9 8.2 8.3 8.4 8.6 8.7 8.8 Iso Butane 17.9 16.2 17.5 16.4 18.7 17.2 17.4 17.7 18.0 18.3 18.5 Unfinished Naphtha - 9.0 3.7 9.2 8.5 7.8 7.9 8.1 8.2 8.4 8.5 Natural Gasoline 4.7 15.4 7.3 8.1 7.8 6.9 7.1 7.2 7.4 7.6 7.7 MTBE 4.1 7.8 12.8 11.4 14.0 13.4 13.6 13.8 14.0 14.2 14.4 Total Blendstocks 108.5 183.9 78.8 94.5 94.4 86.9 88.3 89.5 91.0 92.6 94.1 Total Input 844.9 811.3 543.7 613.5 681.8 605.7 616.6 627.0 638.3 649.9 661.6 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 118.5 111.6 134.9 153.5 180.0 167.4 170.1 173.1 176.1 179.3 180.5 Unleaded Regular 409.8 415.9 241.8 272.7 301.2 279.3 283.9 288.8 293.9 299.4 301.4 Subgrade Unleaded - 20.2 11.8 25.0 30.3 28.0 28.5 29.0 29.5 30.1 30.3 Total Gasoline & Gasoline Blendstocks 533.3 544.6 385.5 451.1 511.5 474.7 482.5 490.9 499.5 508.7 512.2 Distillates Low Sulfur Diesel - - - - - - - - - - - No. 2 Fuel Oil 273.6 266.0 166.1 188.4 221.6 208.1 211.4 214.7 218.1 221.3 222.4 Total Distillates 301.6 276.9 172.4 192.1 221.6 208.1 211.4 214.7 218.1 221.3 222.4 Other Products Mixed Butanes 3.1 2.9 5.4 4.7 6.9 6.3 6.4 6.5 6.6 6.7 6.8 Slurry 14.8 16.0 10.2 12.8 15.6 14.0 14.2 14.5 14.7 14.9 15.0 Benzene Extract 0.3 - 2.0 1.0 1.4 1.3 1.3 1.3 1.3 1.4 1.4 Propane 14.7 11.8 8.6 10.7 11.9 10.8 11.0 11.2 11.3 11.5 11.6 Propylene 24.8 33.2 19.5 20.9 23.7 22.2 22.6 22.9 23.2 23.5 23.7 Green Coke 13.4 10.6 9.6 5.4 4.4 2.5 2.4 2.4 2.4 2.4 2.4 Intermediate Products 3.9 14.0 2.7 - - - - - - - - Total Other 74.9 88.8 59.4 56.0 64.4 57.8 58.6 59.4 60.3 61.1 61.5 Total Products 909.8 910.2 617.3 699.2 797.6 740.5 752.5 765.1 777.8 791.1 796.0 Gross Margin 64.8 99.0 73.6 85.7 115.8 134.8 135.9 138.0 139.5 141.2 134.5 2007 2008 2009 - ------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 69.0 - - Foreign Light Sweet 174.5 - - Foreign Heavy Sweet 5.8 - - Foreign Medium Sour - - - Statoil Type Crude 257.3 - - Atmospheric Resid 71.3 - - Total Crude & Condensate 577.8 - - Blendstocks FCC Charge Stock 36.6 - - Normal Butane 9.0 - - Iso Butane 18.9 - - Unfinished Naphtha 8.7 - - Natural Gasoline 7.9 - - MTBE 14.7 - - Total Blendstocks 95.7 - - Total Input 673.5 - - Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 181.6 - - Unleaded Regular 303.2 - - Subgrade Unleaded 30.5 - - Total Gasoline & Gasoline Blendstocks 515.3 - - Distillates Low Sulfur Diesel - - - No. 2 Fuel Oil 223.7 - - Total Distillates 223.7 - - Other Products Mixed Butanes 6.8 - - Slurry 15.1 - - Benzene Extract 1.4 - - Propane 11.6 - - Propylene 23.8 - - Green Coke 2.3 - - Intermediate Products - - - Total Other 61.7 - - Total Products 800.7 - - Gross Margin 127.3 - -
52 Segment Valuation --------------------------- Pasadena Refinery: Expected Case, Exit Refining - ----------------------------------------------------------------------------- OPERATING COSTS ($ MILLIONS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 - ----------------------------------------------------------------------------------------------------------------------------------- Variable Costs Variable O & O Costs 19.4 21.6 19.8 19.8 21.8 22.1 22.8 23.2 23.5 23.9 24.1 24.4 Crude Throughput, MBbls/D 90.0 83.6 89.7 79.4 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 Variable Costs, $/Bbl 0.59 0.71 0.61 0.68 0.75 0.76 0.78 0.79 0.81 0.82 0.83 0.84 Fixed Costs Taxes other than Income Tax & Insurance 6.2 6.2 5.8 5.8 5.8 5.9 6.0 6.1 6.3 6.6 6.9 7.3 Fixed O & O Costs 38.6 40.9 43.6 43.6 43.6 43.9 44.3 44.6 45.0 45.4 45.7 46.1 Additional Diesel Hydrotreating Costs - - - - - - - - - - - - Less Cost Reductions -0.65 -0.66 -0.67 -0.68 -0.68 -0.69 -0.70 Total Operating Costs 64.2 68.7 69.3 69.3 71.2 71.3 72.5 73.3 74.2 75.1 76.1 77.1
53 Segment Valuation ----------------- Pasadena Refinery: Expected Case, Exit Refining ================================================================================ CAPITAL COSTS ($ MILLIONS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 - ------------------------------------------------------------------------------------------------------------------------------------ Capital Expenditures Mandatory Environmental & Safety 5.1 3.3 5.1 8.9 2.8 1.3 1.0 1.0 0.5 1.0 Other Stay In Business 3.3 4.2 1.0 1.8 1.0 1.0 Turnaround Capital 0.9 10.2 2.5 6.7 8.3 13.8 8.1 1.7 4.4 2.0 Additional Unspecified Capital Discretionary 1.1 4.8 0.5 0 0 Low Sulfur-Gasoline 0.2 2.8 9.0 3.0 Ultra Low Sulfur-Diesel NOx RACT II Total Capital Expenditures 6.0 13.5 7.6 15.6 15.7 24.1 13.4 13.5 8.9 4.0 2006 2007 2008 2009 - ------------------------------------------------------------------------------------------------------------------------------------ Capital Expenditures Mandatory Environmental & Safety 1.0 1.0 Other Stay In Business 1.0 1.0 Turnaround Capital 1.0 0.0 Additional Unspecified Capital Discretionary 0.0 0.0 Low Sulfur-Gasoline Ultra Low Sulfur-Diesel NOx RACT II Total Capital Expenditures 3.0 2.0
54 Segment Valuation ----------------- Pasadena Refinery: Expected Case, Exit Refining ================================================================================ PRO FORMA ECONOMICS ($ MILLIONS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Product Revenues 909.8 910.2 617.3 699.2 797.6 740.5 752.5 765.1 777.8 Raw Materials 844.9 811.3 543.7 613.5 681.8 605.7 616.6 627.0 638.3 Gross Margin, $/Bbl Feed 1.73 2.54 1.96 2.57 3.44 4.01 4.05 4.11 4.15 Margin Adjustment, $/Bbl - - - - - - - - Margin After Adjustment, $/Bbl 1.73 2.54 1.96 2.57 3.44 4.01 4.05 4.11 4.15 Gross Margin 64.8 99.0 73.6 85.7 115.8 134.8 135.9 138.0 139.5 Operating & Overhead Costs 64.2 68.7 69.3 69.3 71.2 71.3 72.5 73.3 74.2 Operating Costs 64.2 68.7 69.3 69.3 71.2 71.3 72.5 73.3 74.2 GATX, Alloc S&T for Cost of Running Bulk Sales, Franchise Tax (1.0) (0.9) (0.4) (0.8) (0.8) (0.8) (0.8) (0.8) Interest on Working Capital (1.2) (1.7) (1.7) (1.7) (1.7) Net Margin 0.6 29.3 3.4 16.0 42.6 61.1 61.0 62.2 62.7 Depreciation 10.8 10.7 10.6 10.6 7.7 9.7 11.3 12.1 12.0 Income Before Taxes (10.2) 18.6 (7.1) 5.5 34.9 51.4 49.7 50.2 50.8 Income Taxes (3.9) 7.1 (2.7) 2.1 13.3 19.5 18.9 19.1 19.3 Income After Taxes (6.3) 11.5 (4.4) 3.4 21.6 31.9 30.8 31.1 31.5 Depreciation Add-Back 10.8 10.7 10.6 10.6 7.7 9.7 11.3 12.1 12.0 Gross Cash Flow 4.5 22.2 6.1 13.9 29.4 41.6 42.1 43.2 43.5 Capital Spending 6.0 13.5 7.6 15.6 15.7 24.1 13.4 13.5 8.9 Net Cash Flow (Incl Terminal Value) (1.5) 8.7 (1.5) (1.7) 13.7 17.5 28.7 29.7 34.6 Net Present Value @ 13% 149 Sale Of Storage 2005 2006 2007 2008 - ----------------------------------------------------------------------------------------------- Product Revenues 791.1 796.0 800.7 Raw Materials 649.9 661.6 673.5 Gross Margin, $/Bbl Feed 4.20 4.00 3.79 Margin Adjustment, $/Bbl - - - Margin After Adjustment, $/Bbl 4.20 4.00 3.79 Gross Margin 141.2 134.5 127.3 37.0 Operating & Overhead Costs 75.1 76.1 77.1 Operating Costs 75.1 76.1 77.1 GATX, Alloc S&T for Cost of Running Bulk Sales, Franchise Tax (0.8) (0.8) (0.8) Interest on Working Capital (1.8) (1.8) (1.8) Net Margin 63.5 55.7 47.5 37.0 Depreciation 10.6 8.9 7.6 37.0 Income Before Taxes 52.9 46.9 39.9 0.0 Income Taxes 20.1 17.8 15.2 0.0 Income After Taxes 32.8 29.1 24.7 0.0 Depreciation Add-Back 10.6 8.9 7.6 37.0 Gross Cash Flow 43.4 37.9 32.3 37.0 Capital Spending 4.0 3.0 2.0 - Net Cash Flow (Incl Terminal Value) 39.4 34.9 30.3 37.0 Net Present Value @
55 Segment Valuation --------------------- Tyler Refinery: Expected Case ================================================================================ CHARGES AND YIELDS (THOUSAND BARRELS PER DAY)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 ----------------------------------------------------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 47.0 49.4 50.1 46.9 48.3 48.3 48.3 48.3 48.3 48.3 48.3 Total Crude & Condensate 47.0 49.4 50.1 46.9 48.3 48.3 48.3 48.3 48.3 48.3 48.3 Blendstocks FCC Chargestocks 1.9 0.9 0.1 0.0 0.7 0.7 0.7 0.7 0.7 0.7 0.7 Normal Butane 0.1 0.3 0.3 0.5 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Iso Butane 0.8 0.8 0.8 0.7 0.8 0.8 0.8 0.8 0.8 0.8 0.8 Purchased Transmix 0.6 0.6 0.6 0.1 0.5 0.5 0.5 0.5 0.5 0.5 0.5 Total Blendstocks 3.3 3.0 2.0 1.4 2.3 2.3 2.3 2.3 2.3 2.3 2.3 Total Input 50.3 52.3 52.1 48.3 50.7 50.7 50.7 50.7 50.7 50.7 50.7 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 3.6 3.4 4.0 3.9 3.7 3.7 3.7 3.7 3.7 3.7 3.7 Regular Unleaded 18.8 20.9 20.3 20.1 20.0 20.0 20.0 20.0 20.0 20.0 20.0 Midgrade Unleaded 4.3 3.9 3.6 3.2 4.3 4.3 4.3 4.3 4.3 4.3 4.3 Total Gasoline & Gasoline Blendstocks 27.2 28.7 28.3 27.8 28.5 28.5 28.5 28.5 28.5 28.5 28.5 Distillates Jet A 5.0 5.0 4.3 5.1 4.8 4.8 4.8 4.8 4.8 4.8 4.8 No. 2 Fuel Oil 2.8 3.2 2.9 2.7 2.9 2.9 2.9 2.9 2.9 2.9 - Low Sulfur Diesel 10.5 10.8 11.4 8.4 10.3 10.3 10.3 10.3 10.3 10.3 13.2 Total Distillates 18.3 19.0 18.5 16.2 18.0 18.0 18.0 18.0 18.0 18.0 18.0 Other Products Propane 0.7 0.7 0.8 1.0 0.7 0.7 0.7 0.7 0.7 0.7 0.7 Propane/Propylene 1.3 1.5 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 Slurry 0.6 0.7 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 Green Coke 1 0.9 0.7 0.7 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Total Other 3.9 3.5 3.9 3.3 3.6 3.6 3.6 3.6 3.6 3.6 3.6 Total Products 49.4 51.2 50.7 47.3 50.0 50.0 50.0 50.0 50.0 50.0 50.0 2007 2008 2009 --------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 48.3 48.3 48.3 Total Crude & Condensate 48.3 48.3 48.3 Blendstocks FCC Chargestocks 0.7 0.7 0.7 Normal Butane 0.3 0.3 0.3 Iso Butane 0.8 0.8 0.8 Purchased Transmix 0.5 0.5 0.5 Total Blendstocks 2.3 2.3 2.3 Total Input 50.7 50.7 50.7 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 3.7 3.7 3.7 Regular Unleaded 20.0 20.0 20.0 Midgrade Unleaded 4.3 4.3 4.3 Total Gasoline & Gasoline Blendstocks 28.5 28.5 28.5 Distillates Jet A 4.8 4.8 4.8 No. 2 Fuel Oil - - - Low Sulfur Diesel 13.2 13.2 13.2 Total Distillates 18.0 18.0 18.0 Other Products Propane 0.7 0.7 0.7 Propane/Propylene 1.4 1.4 1.4 Slurry 0.6 0.6 0.6 Green Coke 0.9 0.9 0.9 Total Other 3.6 3.6 3.6 Total Products 50.0 50.0 50.0
56 Segment Valuation --------------------- Tyler Refinery: Expected Case ================================================================================ FEEDSTOCK AND PRODUCT PRICES (DOLLARS PER BARREL)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 ------------------------------------------------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 22.58 21.01 14.96 18.83 21.28 19.05 19.44 19.83 20.23 20.64 21.06 Total Crude & Condensate Blendstocks FCC Chargestocks 20.10 23.11 23.06 3.40 21.28 19.54 19.85 20.02 20.35 20.69 21.03 Normal Butane 25.87 23.94 17.09 19.59 19.23 17.65 17.93 18.20 18.48 18.74 19.03 Iso Butane 20.60 20.32 15.47 18.39 20.00 18.44 18.73 19.02 19.31 19.59 19.88 Purchased Transmix 21.38 21.07 15.40 16.33 19.42 18.01 18.32 18.62 18.93 19.22 19.54 Total Blendstocks Total Input Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 26.54 25.75 18.79 23.62 27.43 25.53 25.95 26.39 26.85 27.34 27.73 Regular Unleaded 25.21 24.53 17.18 21.95 25.44 23.62 24.01 24.42 24.85 25.31 25.67 Midgrade Unleaded 25.50 25.20 18.13 22.67 25.65 23.84 24.22 24.64 25.07 25.53 25.89 Total Gasoline & Gasoline Blendstocks Distillates Jet A 25.89 24.94 17.55 22.13 24.45 22.91 23.28 23.64 24.01 24.36 24.66 No. 2 Fuel Oil 24.78 22.53 16.03 20.66 23.05 21.67 22.02 22.36 22.71 23.04 23.33 Low Sulfur Diesel 25.53 23.10 16.72 21.12 23.92 22.34 22.70 23.05 23.41 23.75 24.05 Total Distillates Other Products Propane 16.86 14.98 9.59 13.20 16.06 14.57 14.81 15.04 15.28 15.50 15.70 Propane/Propylene 23.43 26.82 15.80 18.74 20.50 19.06 19.34 19.62 19.90 20.17 20.40 Slurry 15.00 14.36 9.71 11.88 13.61 11.79 12.00 12.21 12.42 12.63 12.81 Green Coke 13.03 12.09 12.03 6.29 4.55 1.56 1.52 1.49 1.45 1.41 1.36 Total Other Total Products 2007 2008 2009 -------------------------------------------------------------------------------------- Refinery Input Crude and Condensate Domestic Light Sweet 21.48 21.92 22.36 Total Crude & Condensate Blendstocks FCC Chargestocks 21.36 21.70 22.05 Normal Butane 19.34 19.65 19.96 Iso Butane 20.20 20.53 20.86 Purchased Transmix 19.88 20.23 20.59 Total Blendstocks Total Input Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 28.10 28.47 28.86 Regular Unleaded 26.01 26.36 26.72 Midgrade Unleaded 26.24 26.59 26.95 Total Gasoline & Gasoline Blendstocks Distillates Jet A 24.99 25.32 25.66 No. 2 Fuel Oil 23.64 23.95 24.27 Low Sulfur Diesel 24.36 24.69 25.02 Total Distillates Other Products Propane 15.91 16.13 16.35 Propane/Propylene 20.64 20.89 21.14 Slurry 13.00 13.21 13.41 Green Coke 1.32 1.27 1.23 Total Other Total Products
57 Segment Valuation --------------------- Tyler Refinery: Expected Case =============================================================================== GROSS MARGIN ($ MILLIONS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 - ------------------------------------------------------------------------------------------------------------------------------------ Refinery Input Crude and Condensate Domestic Light Sweet 387.4 378.6 273.7 322.2 375.6 336.2 343.0 349.9 357.0 364.3 371.6 379.1 386.7 394.5 Total Crude & Condensate 387.4 378.6 273.7 322.2 375.6 336.2 343.0 349.9 357.0 364.3 371.6 379.1 386.7 394.5 Blendstocks FCC Chargestocks 13.7 7.6 0.7 0.0 5.6 5.1 5.2 5.3 5.3 5.4 5.5 5.6 5.7 5.8 Normal Butane 1.2 2.3 2.1 3.5 2.1 2.0 2.0 2.0 2.1 2.1 2.1 2.1 2.2 2.2 Iso Butane 6.1 6.2 4.5 4.6 5.7 5.3 5.4 5.4 5.5 5.6 5.7 5.8 5.9 6.0 Purchased Transmix 4.8 4.9 3.6 0.8 3.6 3.3 3.4 3.4 3.5 3.5 3.6 3.7 3.7 3.8 Total Blendstocks 25.7 25.6 11.9 9.7 17.0 15.7 15.9 16.1 16.4 16.7 16.9 17.2 17.5 17.8 Total Input 413.1 404.2 285.5 332.0 392.6 351.9 358.9 366.1 373.4 380.9 388.5 396.3 404.2 412.3 Refinery Output Gasoline and Gasoline Blendstocks Premium Unleaded 34.9 31.9 27.1 33.7 37.2 34.6 35.2 35.8 36.4 37.1 37.6 38.1 38.6 39.1 Regular Unleaded 173.0 187.2 127.2 161.0 185.9 172.6 175.4 178.5 181.6 184.9 187.6 190.1 192.6 195.2 Midgrade Unleaded 40.1 36.0 23.7 26.9 39.8 37.0 37.6 38.2 38.9 39.6 40.2 40.7 41.2 41.8 Total Gasoline & Gasoline 253.9 261.4 182.4 227.7 268.9 249.9 254.0 258.4 262.8 267.7 271.5 275.1 278.8 282.6 Blendstocks Distillates Jet A 47.4 45.7 27.3 40.9 43.2 40.5 41.1 41.8 42.4 43.0 43.6 44.1 44.7 45.3 No. 2 Fuel Oil 25.6 25.9 16.9 20.1 24.3 22.8 23.2 23.5 23.9 24.3 - - - - Low Sulfur Diesel 97.7 91.0 69.5 65.1 89.8 83.8 85.2 86.5 87.8 89.1 115.5 117.1 118.6 120.2 Total Distillates 170.7 162.6 113.7 126.2 157.2 147.1 149.5 151.8 154.2 156.4 159.1 161.2 163.4 165.6 Other Products Propane 4.1 3.8 2.8 4.9 4.1 3.7 3.8 3.8 3.9 3.9 4.0 4.1 4.1 4.2 Propane/Propylene 11.2 14.3 8.2 9.3 10.4 9.6 9.8 9.9 10.1 10.2 10.3 10.4 10.6 10.7 Slurry 3.4 3.5 2.2 2.5 3.1 2.7 2.7 2.8 2.8 2.8 2.9 2.9 3.0 3.0 Green Coke 5.5 4.0 3.0 1.6 1.4 0.5 0.5 0.5 0.5 0.4 0.4 0.4 0.4 0.4 Total Other 25.8 22.5 16.9 18.0 19.0 16.5 16.7 17.0 17.2 17.4 17.6 17.8 18.1 18.3 Total Products 450.4 446.5 313.0 371.9 445.1 413.6 420.2 427.2 434.2 441.5 448.3 454.2 460.3 466.5 Gross Margin 37.3 42.3 27.5 39.9 52.5 61.7 61.3 61.1 60.8 60.6 59.7 57.9 56.1 54.2
58 Segment Valuation ----------------------- Tyler Refinery: Expected Case ================================================================================ OPERATING COSTS ($ MILLIONS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 - ---------------------------------------------------------------------------------------------------------------------------------- Variable Costs Variable O & O Costs n/a 13.4 11.6 11.6 12.0 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 Crude Throughput, MBbls/D 47.0 49.4 50.1 46.9 48.3 48.3 48.3 48.3 48.3 48.3 48.3 48.3 48.3 48.3 Variable Costs, $/Bbl 0.74 0.63 0.68 0.68 0.68 0.69 0.69 0.70 0.71 0.71 0.72 0.72 0.73 Fixed Costs Taxes other than Income Tax & Insurance n/a 2.8 2.7 2.7 2.7 2.8 2.8 2.8 2.8 2.8 2.9 2.9 2.9 2.9 Fixed O & O Costs n/a 23.8 28.4 26.1 26.1 26.3 26.5 26.7 26.9 27.1 27.3 27.6 27.8 28.0 Total Operating Costs n/a 39.9 42.7 40.4 40.8 41.1 41.4 41.8 42.1 42.4 42.8 43.1 43.5 43.8 Total Costs n/a 39.9 42.7 40.4 40.8 41.1 41.4 41.8 42.1 42.4 42.8 43.1 43.5 43.8
59 Segment Valuation ----------------------- Tyler Refinery: Expected Case - ------------------------------------------------------------------------------ CAPITAL COSTS ($ MILLIONS)
1996 1997 1998 1999* 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 ---- ---- ---- ----- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- Capital Mandatory Environmental & Safety 5.4 4.2 6.6 4.3 1.0 1.0 1.8 1.5 1.5 3.0 3.1 3.1 3.1 3.1 Turnaround Capital 4.1 3.9 0.9 0.0 4.0 4.2 0.0 0.9 1.0 2.1 2.1 2.1 2.2 2.2 Additional Estimated Sustaining 7.8 11.2 10.6 10.5 7.9 7.9 7.8 7.8 7.8 Low Sulfur-Gasoline 3.0 7.0 Ultra Low Sulfur-Diesel 5.0 15.0 20.0 Total Capital Expenditures 9.5 8.1 7.5 4.3 5.0 13.0 16.0 20.0 18.0 28.1 33.1 13.1 13.1 13.1
*actual capital from Tyler refinery staff, not CSFB document 60 Segment Valuation ------------------------------------ Tyler Refinery: Expected Case - -------------------------------------------------------------------------------- PRO FORMA ECONOMICS ($ MILLIONS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Product Revenues 450.4 446.5 313.0 371.9 445.1 413.6 420.2 427.2 434.2 441.5 Raw Materials 413.1 404.2 285.5 332.0 392.6 351.9 358.9 366.1 373.4 380.9 Tyler Rack Profits 8.5 8.5 8.4 8.0 8.1 8.1 8.2 8.3 8.3 8.4 Gross Margin, $/Bbl Feed 2.49 2.66 1.89 2.72 3.27 3.78 3.76 3.75 3.74 3.73 Margin Adjustment, $/Bbl - - - - - - - - - - Margin After Adjustment, $/Bbl 2.49 2.66 1.89 2.72 3.27 3.78 3.76 3.75 3.74 3.73 Gross Margin 45.8 50.9 35.9 47.9 60.5 69.9 69.5 69.3 69.1 69.0 Operating & Overhead Costs n/a 39.9 42.7 40.4 40.8 41.1 41.4 41.8 42.1 42.4 Operating Costs n/a 39.9 42.7 40.4 40.8 41.1 41.4 41.8 42.1 42.4 Interest on Working Capital (1.1) (1.1) (0.8) (0.9) (1.1) (1.0) (1.0) (1.0) (1.0) (1.0) Net Margin n/a 9.8 (7.5) 6.6 18.7 27.8 27.1 26.6 26.0 25.5 Depreciation 2.6 2.6 2.6 3.8 5.0 7.1 9.2 11.0 13.4 Income Before Taxes 7.2 (10.2) 4.0 14.8 22.8 20.0 17.3 15.0 12.2 Income Taxes 2.8 (3.9) 1.5 5.6 8.6 7.6 6.6 5.7 4.6 Income After Taxes n/a 4.5 (6.3) 2.5 9.2 14.1 12.4 10.8 9.3 7.6 Depreciation Add-Back 2.6 2.6 2.6 3.8 5.0 7.1 9.2 11.0 13.4 Gross Cash Flow 7.1 (3.7) 5.1 13.0 19.1 19.5 20.0 20.3 20.9 Capital Spending 9.5 8.1 7.5 4.3 5.0 13.0 16.0 20.0 18.0 28.1 Net Cash Flow (Incl Terminal Value) n/a (1.0) (11.2) 0.8 8.0 6.1 3.5 (0.0) 2.2 (7.1) End 2006 2007 2008 2009 Value ------ ------ ------ ------ ------- Product Revenues 448.3 454.2 460.3 466.5 Raw Materials 388.5 396.3 404.2 412.3 Tyler Rack Profits 8.5 8.5 8.6 8.7 Gross Margin, $/Bbl Feed 3.69 3.59 3.50 3.40 Margin Adjustment, $/Bbl - - - - Margin After Adjustment, $/Bbl 3.69 3.59 3.50 3.40 Gross Margin 68.2 66.4 64.7 62.9 Operating & Overhead Costs 42.8 43.1 43.5 43.8 Operating Costs 42.8 43.1 43.5 43.8 Interest on Working Capital (1.1) (1.1) (1.1) (1.1) Net Margin 24.4 22.2 20.1 17.9 Depreciation 16.9 18.1 17.2 16.9 Income Before Taxes 7.5 4.2 2.9 1.0 Income Taxes 2.8 1.6 1.1 0.4 Income After Taxes 4.6 2.6 1.8 0.6 Depreciation Add-Back 16.9 18.1 17.2 16.9 Gross Cash Flow 21.5 20.7 19.0 17.5 Capital Spending 33.1 13.1 13.1 13.1 Net Cash Flow (Incl Terminal Value) (11.5) 7.6 5.9 4.4 34 Net Present Value @ 13% 24
61 Segment Valuation -------------------------- Crown Central Terminals: Expected Case - -------------------------------------------------------------------------------- PRO FORMA ECONOMICS ($ THOUSANDS)
1996 1997 1998 1999 2000 2001 2002 - --------------------------------------------------------------------------------------------------------------------- Gross Margin Gasoline Volumes, b/d 4,701 6,786 6,982 7,127 7,055 7,055 7,055 Gasoline Margin, $/gal 0.0079 0.0079 0.0091 0.0129 0.0110 0.0112 0.0114 Distillate Volumes, b/d 4,419 6,295 8,371 10,547 9,459 9,459 9,459 Distillate Margin, $/gal 0.0085 0.0075 0.0064 0.0063 0.0064 0.0065 0.0066 Wholesale Margin 1,150 1,542 1,792 2,432 2,108 2,150 2,193 Volumes, b/d 16,596 14,047 11,069 11,714 11,392 11,392 11,392 Margin, $/gal 0.0045 0.0045 0.0045 0.0045 0.0045 0.0046 0.0047 Additive Margin, b/d 5,010 3,806 2,108 1,979 2,044 2,044 2,044 Additive Rates, $/gal 0.0025 0.0025 0.0025 0.0025 0.0025 0.0026 0.0026 3rd Party Margin 1,337 1,115 844 884 864 881 899 Volume, b/d 21,129 19,896 19,964 19,281 19,623 19,623 19,623 Margin, $/gal 0.0045 0.0045 0.0045 0.0045 0.0045 0.0046 0.0047 Additive Volumes, b/d 20,672 19,405 19,467 18,530 18,999 18,999 18,999 Additive Margin, $/gal 0.0025 0.0025 0.0025 0.0025 0.0025 0.0026 0.0026 Retail Alternative Margin 2,250 2,116 2,123 2,040 2,082 2,123 2,166 Other 19 19 12 0 6 6 6 Intra-Company Freight 4,674 4,814 5,014 4,921 4,968 5,067 5,168 Wholesale Freight 441 650 903 852 878 895 913 Delivery Operations 5,115 5,464 5,917 5,773 5,845 5,962 6,081 Total Gross Margin 9,871 10,256 10,689 11,130 10,905 11,123 11,345 Operating Expenses Salaries, Wages & Benefits 1,218 1,243 1,301 1,415 1,358 1,385 1,413 Environmental 606 502 660 475 435 435 405 Maintenance 492 502 782 765 774 789 805 Product Gain/Loss -284 -210 -49 -191 -120 -122 -125 Other 1,024 1,012 936 760 848 865 882 Terminal Operations 3,056 3,049 3,630 3,224 3,295 3,352 3,380 Salaries, Wages & Benefits 2,072 2,215 2,403 2,540 2,472 2,521 2,571 Freight 368 356 824 667 746 760 776 Truck Rental 720 748 746 851 799 814 831 Fuel 356 356 0 0 0 0 0 Other 525 454 487 310 399 406 415 Delivery Operations 4,041 4,129 4,460 4,368 4,414 4,502 4,592 Total Operating Expenses 7,097 7,178 8,090 7,592 7,709 7,854 7,972 EBITDA 2,774 3,078 2,599 3,538 3,196 3,269 3,373 Depreciation 734 977 1,260 Income Before Taxes 2,462 2,292 2,113 Income Taxes 38.0% 936 871 803 Income After Taxes 1,527 1,421 1,310 Depreciation Add-Back 734 977 1,260 Gross Cash Flow 2,261 2,398 2,570 Sustaining Capital 1,795 1,900 2,550 Net Cash Flow 466 498 20 NPV @ 13.0% WACC 6,555 Terminal 2003 2004 2005 2006 2007 2008 2009 Value - -------------------------------------------------------------------------------------------------------------------------------- Gross Margin Gasoline Volumes, b/d 7,055 7,055 7,055 7,055 7,055 7,055 7,055 Gasoline Margin, $/gal 0.0116 0.0119 0.0121 0.0123 0.0126 0.0128 0.0131 Distillate Volumes, b/d 9,459 9,459 9,459 9,459 9,459 9,459 9,459 Distillate Margin, $/gal 0.0068 0.0069 0.0070 0.0072 0.0073 0.0075 0.0076 Wholesale Margin 2,237 2,282 2,327 2,374 2,421 2,470 2,519 Volumes, b/d 11,392 11,392 11,392 11,392 11,392 11,392 11,392 Margin, $/gal 0.0048 0.0049 0.0050 0.0051 0.0052 0.0053 0.0054 Additive Margin, b/d 2,044 2,044 2,044 2,044 2,044 2,044 2,044 Additive Rates, $/gal 0.0027 0.0027 0.0028 0.0028 0.0029 0.0029 0.0030 3rd Party Margin 917 935 954 973 993 1,013 1,033 Volume, b/d 19,623 19,623 19,623 19,623 19,623 19,623 19,623 Margin, $/gal 0.0048 0.0049 0.0050 0.0051 0.0052 0.0053 0.0054 Additive Volumes, b/d 18,999 18,999 18,999 18,999 18,999 18,999 18,999 Additive Margin, $/gal 0.0027 0.0027 0.0028 0.0028 0.0029 0.0029 0.0030 Retail Alternative Margin 2,209 2,253 2,298 2,344 2,391 2,439 2,488 Other 6 6 7 7 7 7 7 Intra-Company Freight 5,272 5,377 5,485 5,594 5,706 5,820 5,937 Wholesale Freight 931 950 969 988 1,008 1,028 1,049 Delivery Operations 6,203 6,327 6,453 6,582 6,714 6,848 6,985 Total Gross Margin 11,572 11,804 12,040 12,281 12,526 12,777 13,032 Operating Expenses Salaries, Wages & Benefits 1,441 1,470 1,499 1,529 1,560 1,591 1,623 Environmental 350 406 414 423 431 440 449 Maintenance 821 837 854 871 889 906 924 Product Gain/Loss -127 -130 -132 -135 -138 -141 -143 Other 900 918 936 955 974 994 1,013 Terminal Operations 3,385 3,501 3,571 3,643 3,716 3,790 3,866 Salaries, Wages & Benefits 2,623 2,675 2,729 2,783 2,839 2,896 2,954 Freight 791 807 823 840 856 873 891 Truck Rental 847 864 882 899 917 936 954 Fuel 0 0 0 0 0 0 0 Other 423 431 440 449 458 467 476 Delivery Operations 4,684 4,778 4,873 4,971 5,070 5,172 5,275 Total Operating Expenses 8,069 8,279 8,445 8,614 8,786 8,962 9,141 EBITDA 3,504 3,524 3,595 3,667 3,740 3,815 3,891 Depreciation 1,467 1,558 1,648 1,745 1,878 1,996 2,114 Income Before Taxes 2,037 1,966 1,947 1,922 1,862 1,819 1,778 Income Taxes 774 747 740 730 708 691 675 Income After Taxes 1,263 1,219 1,207 1,191 1,155 1,128 1,102 Depreciation Add-Back 1,467 1,558 1,648 1,745 1,878 1,996 2,114 Gross Cash Flow 2,730 2,777 2,855 2,937 3,032 3,124 3,216 Sustaining Capital 1,500 1,936 1,975 2,014 2,055 2,096 2,138 Net Cash Flow 1,230 841 880 922 978 1,028 1,078 8,292 NPV @ 13.0% WACC
62 Segment Valuation ---------------------------------- La Gloria Terminals: Expected Case ============================================================================== PRO FORMA ECONOMICS ($ THOUSANDS)
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 - ------------------------------------------------------------------------------------------------------------------------------------ Gross Margin Gasoline Volumes, b/d 10,038 9,689 11,182 10,084 10,633 10,633 10,633 10,633 10,633 10,633 Gasoline Margin, $/gal 0.0260 0.0232 0.0148 0.0171 0.0159 0.0162 0.0165 0.0168 0.0172 0.0175 Distillate Volumes, b/d 4,373 5,333 5,612 5,580 5,596 5,596 5,596 5,596 5,596 5,596 Distillate Margin, $/gal 0.0203 0.0156 0.0100 0.0169 0.0132 0.0135 0.0138 0.0140 0.0143 0.0146 Wholesale Margin 5,355 4,723 3,394 4,082 3,721 3,796 3,872 3,949 4,028 4,109 Volumes, b/d 6,105 6,459 5,075 5,062 5,069 5,069 5,069 5,069 5,069 5,069 Margin, $/gal 0.0062 0.0060 0.0064 0.0065 0.0065 0.0066 0.0067 0.0069 0.0070 0.0071 Additive Margin, b/d 5,080 5,106 4,478 4,526 4,502 4,502 4,502 4,502 4,502 4,502 Additive Rates, $/gal 0.0025 0.0025 0.0025 0.0025 0.0025 0.0026 0.0026 0.0027 0.0027 0.0028 3rd Party Margin 775 790 671 679 675 689 702 716 731 745 Volume, b/d 0 0 0 0 0 0 0 0 0 0 Margin, $/gal - - - - - - - - - - Additive Volumes, b/d 0 0 0 0 0 0 0 0 0 0 Additive Margin, $/gal - - - - - - - - - - Retail Alternative Margin 0 0 0 0 0 0 0 0 0 0 Other 0 0 0 0 0 0 0 0 0 0 Intra-Company Freight 0 0 0 0 0 0 0 0 0 0 Wholesale Freight 0 0 0 0 0 0 0 0 0 0 Delivery Operations 0 0 0 0 0 0 0 0 0 0 Total Gross Margin 6,131 5,513 4,065 4,761 4,396 4,484 4,574 4,665 4,759 4,854 Operating Expenses Salaries, Wages & Benefits 417 396 402 430 416 424 433 441 450 459 Environmental 70 115 192 215 225 225 255 255 240 245 Maintenance 212 123 528 205 367 374 381 389 397 405 Product Gain/Loss -33 -78 -74 -52 -63 -64 -66 -67 -68 -70 Other 641 545 585 287 436 445 454 463 472 481 Terminal Operations 1,307 1,101 1,633 1,085 1,381 1,404 1,457 1,481 1,491 1,521 Salaries, Wages & Benefits 0 0 0 0 0 0 0 0 0 0 Freight 0 0 0 0 0 0 0 0 0 0 Truck Rental 0 0 0 0 0 0 0 0 0 0 Fuel 0 0 0 0 0 0 0 0 0 0 Other 0 0 0 0 0 0 0 0 0 0 Delivery Operations 0 0 0 0 0 0 0 0 0 0 Total Operating Expenses 1,307 1,101 1,633 1,085 1,381 1,404 1,457 1,481 1,491 1,521 EBITDA 4,824 4,412 2,432 3,676 3,016 3,081 3,117 3,184 3,268 3,333 Depreciation 471 613 687 744 795 855 Income Before Taxes 2,544 2,468 2,430 2,440 2,473 2,478 Income Taxes 38.0% 967 938 923 927 940 942 Income After Taxes 1,578 1,530 1,506 1,513 1,533 1,536 Depreciation Add-Back 471 613 687 744 795 855 Gross Cash Flow 2,049 2,143 2,194 2,257 2,328 2,392 Sustaining Capital 1,485 1,200 775 875 1,084 1,105 Net Cash Flow 564 943 1,419 1,382 1,245 1,286 Terminal 2006 2007 2008 2009 Value - ------------------------------------------------------------------------------------------------------------------------------------ Gross Margin Gasoline Volumes, b/d 10,633 10,633 10,633 10,633 Gasoline Margin, $/gal 0.0179 0.0182 0.0186 0.0190 Distillate Volumes, b/d 5,596 5,596 5,596 5,596 Distillate Margin, $/gal 0.0149 0.0152 0.0155 0.0158 Wholesale Margin 4,191 4,275 4,360 4,447 Volumes, b/d 5,069 5,069 5,069 5,069 Margin, $/gal 0.0073 0.0074 0.0076 0.0077 Additive Margin, b/d 4,502 4,502 4,502 4,502 Additive Rates, $/gal 0.0028 0.0029 0.0029 0.0030 3rd Party Margin 760 776 791 807 Volume, b/d 0 0 0 0 Margin, $/gal - - - - Additive Volumes, b/d 0 0 0 0 Additive Margin, $/gal - - - - Retail Alternative Margin 0 0 0 0 Other 0 0 0 0 Intra-Company Freight 0 0 0 0 Wholesale Freight 0 0 0 0 Delivery Operations 0 0 0 0 Total Gross Margin 4,951 5,050 5,151 5,254 Operating Expenses Salaries, Wages & Benefits 468 478 487 497 Environmental 250 255 260 265 Maintenance 413 421 429 438 Product Gain/Loss -71 -72 -74 -75 Other 491 501 511 521 Terminal Operations 1,551 1,582 1,614 1,646 Salaries, Wages & Benefits 0 0 0 0 Freight 0 0 0 0 Truck Rental 0 0 0 0 Fuel 0 0 0 0 Other 0 0 0 0 Delivery Operations 0 0 0 0 Total Operating Expenses 1,551 1,582 1,614 1,646 EBITDA 3,400 3,468 3,537 3,608 Depreciation 933 1,014 1,104 1,190 Income Before Taxes 2,467 2,454 2,434 2,418 Income Taxes 938 932 925 919 Income After Taxes 1,530 1,521 1,509 1,499 Depreciation Add-Back 933 1,014 1,104 1,190 Gross Cash Flow 2,462 2,536 2,613 2,689 Sustaining Capital 1,128 1,150 1,173 1,197 Net Cash Flow 1,335 1,386 1,439 1,493 11,482 NPV @ 13.0% WACC 10,153
63 -----END PRIVACY-ENHANCED MESSAGE-----