Billionaire William (Bill) Koch does not have to sell his Oxbow Carbon LLC so that two private equity firms can recoup an investment of more than $250 million in the energy company, the Delaware Supreme Court ruled last month, according to Bloomberg. The court reversed a lower-court order, saying the trial judge misconstrued an investment agreement when he ruled that Crestview Partners LLC and Load Line Capital LLC could force the sale of Oxbow (GM Aug. 10, 2018). Koch had to put up an $87.8 million bond in order to pursue the appeal (GM Sept. 28, 2018).
Delaware Chancery Court Judge Travis Laster had found that a hole in the investment pact allowed Crestview and Load Line to argue that Koch violated good-faith and fair-dealing duties when he sought to thwart a sale. The Supreme Court, however, found no such gap in the agreement.
A Crestview spokesman said the fund was disappointed with the ruling, but would continue to exercise “appropriate oversight of the company’s management and business activities” to protect its investment. Loadline officials could not be reached for comment.
Brad Goldstein, an Oxbow spokesman, said the company is “evaluating its next steps” in connection with the controversy over the proposed sale. Koch had argued that some partners of New York-based Crestview conspired with disgruntled Oxbow executives in a bid to oust him as CEO and force a quick sale. Laster had rejected that argument, finding the conspiracy allegations didn’t overcome Koch’s obligations to sell Oxbow if the funds properly requested it.
During trial, Crestview targeted what it said was Koch’s mismanagement of Oxbow, citing demands that the company pick up the tab for his personal Dassault Falcon jet and his children’s private-school tuition. Koch, who reimbursed the company $5.3 million over the jet in 2015, said the payment was not an acknowledgment of wrongdoing and denies charging the company for his children’s fees to attend Oxbridge Academy in Florida. He argued that Crestview investors, some of whom served as Oxbow directors, engaged in “greenmail” in their unsuccessful bid to oust him.
Oxbow is known as one of the world’s biggest producers of petroleum coke used in aluminum production and is among the largest privately held companies in the U.S. In addition to petcoke, Oxbow has been involved in several commodities, including fertilizer, sulfur, sulfuric acid, coal, carbon, and gypsum. It bought the fertilizer and sulfur trading business of International Commodities Export Corp. (ICEC) in 2011 (GM Feb. 7, 2011; Nov. 29, 2010). However, it sold its Oxbow Fertilizer LLC unit to Oakley Fertilizer Inc., North Little Rock, Ark., in late 2017 (GM Nov. 3, 2017).
Bill Koch is the brother of David and Charles Koch of Koch Industries Inc., Wichita. Bill Koch is worth an estimated $4 billion, according to Bloomberg data.