SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 20, 2000
CROWN ENERGY CORPORATION
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(Exact name of registrant as specified in its charter)
Utah 0-19365 87-0368981
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State or other jurisdiction Commission File No. IRS Employer ID #
of incorporation
215 South State, Suite 650, Salt Lake City, Utah 84111
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Address and zip code of principal executive offices
801-537-5610
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Registrant's telephone number
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Item 1. Changes in Control of Registrant
Not Applicable
Item 2. Acquisition or Disposition of Assets
Not Applicable
Item 3. Bankruptcy or Receivership
Not Applicable
Item 4. Changes in Registrant's Certifying Accountant
Not Applicable
Item 5. Other Events
Crown Energy Corporation (together with its affiliates, the "Company")
is the majority-owner of Crown Asphalt Distribution, L.L.C. ("Crown
Distribution"), a limited liability company in which MCNIC Pipeline & Processing
Company, a Michigan corporation ("MCNIC") is also an approximately 49% owner.
Under the Operating Agreement applicable to Crown Distribution, MCNIC initially
advanced sums to Crown Distribution under a working capital loan (the "Loan")
which was due and payable on or before by December 31, 1999. The Company and
Crown Distribution maintain that in July 1999, MCNIC agreed in writing to "roll"
the balance of the Loan into the existing line of credit facility (the "Credit
Line") which is not yet due or payable.
On March 27, 2000, MCNIC delivered to Crown Distribution a notice of
default with respect to the Loan, and demanded payment of the outstanding
principal balance plus all interest accrued thereon. Subsequently, the Company
and Crown Distribution have engaged in considerable discussions with MCNIC in an
attempt to resolve the claims and demands made by MCNIC against Crown
Distribution.
On June 20, 2000, MCNIC filed a Complaint in the Third Judicial
District Court, Salt Lake County, Utah, against Crown Distribution. The action
seeks to foreclose on alleged mortgage and security interest in and to certain
real and personal property of Crown Distribution, which property constitutes a
substantial part of the operating assets of Crown Distribution.
In summary, in its Complaint MCNIC does not acknowledge its prior
commitment to "roll" the Loan into the Credit Line and alleges that Crown
Distribution is in default on the promissory note evidencing the Loan to Crown
Distribution in the amount of $7,141,930.00. MCNIC further alleges that the
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total amount owed by Crown Distribution to MCNIC is in excess of $15,000,000, as
well as interest at the rate of 18% from January 1, 2000 until paid in full. The
Complaint also seeks the appointment of a receiver to ensure and protect the
interests of MCNIC in the property of Crown Distribution, pending a
determination by the Court of the merits of the Complaint.
The Company and Crown Distribution intend to vigorously defend against
this litigation and believe that they have certain available defenses, claims
and counterclaims. The Company's and Crown Distribution's managements further
believe that certain of MCNIC's allegations are lacking in either legal or
factual basis. However, litigation is inherently uncertain and the Company and
Crown Distribution are therefore unable to predict the outcome of the
litigation. Interested persons should note that, in the event MCNIC prevails in
the action against Crown Distribution, and depending upon the extent and nature
of any relief granted by the Court, Crown Distribution may be severely and
adversely impacted and may lose possession of some or all of its primary assets
and sources of revenues. Further, since Crown Distribution provides a very
significant portion of the Company's revenues from operations, the Company is
likely to be materially and adversely impacted by any adverse outcome of MCNIC's
litigation.
Item 6. Resignation of Registrant's Directors
Not Applicable
Item 7. Financial Statement, Pro Forma Financial Information and Exhibits
Not Applicable
Item 8. Changes in Fiscal Year
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CROWN ENERGY CORPORATION
/s/ Alexander L. Searl
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Alexander L. Searl
Chief Operating Officer and
Chief Financial Officer
DATED: June 27, 2000
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