Bill Koch Ordered to Sell Oxbow Carbon in Investor Dispute
(Bloomberg) -- Billionaire William Koch was ordered to sell his Oxbow Carbon LLC so two private equity firms can recoup more than $150 million invested in the energy company and get damages for Koch’s unwillingness to put the firm on the auction block.
Delaware Chancery Court Judge Travis Laster said Wednesday that Crestview Partners LLC and Load Line Capital LLC had a right to demand an exit sale under their investment agreement with Oxbow and deserve unspecified damages for Koch’s decision to drag his feet in putting the company up for sale. Laster said he’ll appoint a monitor to make sure the sale is completed within a year.
“Crestview is very pleased with Vice Chancellor Laster’s well-reasoned and thorough opinion directing an exit sale of Oxbow Carbon and awarding damages,” Michael Carlinsky, a lawyer for Crestview, said in an emailed statement. Dale Christensen, a lawyer for Load Line, didn’t immediately return a call for comment.
The ruling means buyers will begin eyeing Oxbow, one of the world’s biggest producers of petroleum coke used in aluminum production and one of the U.S.’s largest privately held companies. Koch is the brother of conservative billionaire political donors David Koch and Charles Koch. He’s worth an estimated $4 billion, according to the Bloomberg Billionaires Index.
Oxbow officials were disappointed with Laster’s ruling on the forced sale and will ask the Delaware Supreme Court to overturn it, Brad Goldstein, Koch’s spokesman, said in an emailed statement.
Koch argued that some partners of New York-based Crestview wrongfully conspired with disgruntled Oxbow executives to seek to oust Koch as CEO and force a quick sale in violation of the agreement. Laster rejected that argument, finding the conspiracy allegations didn’t overcome Koch’s obligations to sell Oxbow if the funds properly requested it.
“The minority members bargained for the right to exit their investment after seven years,” Laster said. “The Koch parties deprived them of this right.”
The damages the funds are entitled to will be based in part on a rejected 2016 buyout offer for Oxbow from Arclight Capital Partners LLC and Koch’s hiring of lawyers and financial advisers to help him thwart the exit sale, Laster ruled.
The judge said he needed a monitor to insure there’d be no more attempts by Koch to hamper efforts to put Oxbow up for auction. The monitor, who won’t have decision-making power, will oversee “compliance with the court’s order” and report problems to Laster, the judge said.
The case is In Re Oxbow Carbon LLC Unitholder Litigation, CA12447, Delaware Chancery Court (Wilmington).
©2018 Bloomberg L.P.