Billionaire Bill Koch Doesn’t Have to Sell His Oxbow Carbon

(Bloomberg) -- Billionaire Bill Koch doesn't have to sell his Oxbow Carbon LLC so two private equity firms can recoup an investment of more than $250 million in the energy company, an appeals court ruled, reversing a lower-court order.

The Delaware Supreme Court said Thursday that a trial judge misconstrued an investment agreement when he ruled that Crestview Partners LLC and Load Line Capital LLC could force the sale of Oxbow.

Delaware Chancery Court Judge Travis Laster found that a hole in the investment pact allowed Crestview and Load Line to argue Koch violated good-faith and fair-dealing duties when he campaigned to thwart a sale. But the state's highest court said there was no such gap in the agreement.

Oxbow is one of the world's biggest producers of petroleum coke used in aluminum production and among the largest privately held companies in the U.S. Bill Koch, a brother of conservative billionaire political donors David Koch and Charles Koch, has a net worth of $4.1 billion, according to an estimate by the Bloomberg Billionaires Index.

Jeffrey Taufield, a Crestview spokesman, said Thursday 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 couldn't 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 wasn't an acknowledgment of wrongdoing and denies charging the company for his children's fees to attend Oxbridge Academy in Florida. The billionaire said Crestview investors, some of whom served as Oxbow directors, engaged in “greenmail” in their unsuccessful bid to oust him.

The case is Oxbow Carbon & Minerals Holdings LLC v. Crestview-Oxbow Acquisition LLC, No. 536-2018, Delaware Supreme Court (Dover).

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Steve Stroth, Joe Schneider

©2019 Bloomberg L.P.