Charter Company
Encyclopedia
The Charter Company of Jacksonville, Florida
was a conglomerate with more than 180 subsidiaries that was in the Fortune 500
for 11 years beginning in 1974 and ranked 61st in 1984 before it sought bankruptcy protection in late 1984 and spiraled into obscurity.
, just graduated from college. The company’s roots were from the Mason Lumber Company, founded in 1919.
Edward Ball, a powerful figure in Florida business and politics for decades, was Mason’s friend and mentor. Ball worked for Alfred I. du Pont
for nine years as a business associate before du Pont’s death in 1935, then managed the trust’s assets for another 46 years.
Charter started with a group of Florida mortgage, banking and land-developing firms. The company then bought 60 small gas stations in 1968.
In 1970, Charter purchased a petroleum operation for $70 million from the Signal Companies
. Included in the deal was a small gasoline refinery in Houston, Texas
in need of updating, a string of gas stations in the Southeast and a handful of questionable tanker contracts. Four years later, when the Arab Oil Embargo
struck, Charter cashed in.
Also in 1970, congress repealed an exemption which allowed charitable trusts to control banks, forcing the du Pont Trust to divest itself of the Florida National Bank Group
, which Charter purchased. Charter also owned 8.4% of the St. Joe Paper Company, one of the largest assets in the du Pont Trust, while St. Joe owned 22% of Charter. The two companies exchanged shares in 1972 with the intention of merging.
Senator Joseph Tydings
was an investment partner in Charter since 1964 with $2 million in equity. At one time, Tydings was the largest Charter stockholder outside of the Mason family. A Life Magazine article in 1970 suggested that the senator used his influence to assist Charter in business deals, but no laws were broken.
In 1975, Charter purchased Redbook
from Norton Simon
Inc. In 1978, Charter acquired Downe Communications
, the publisher of the Ladies' Home Journal
. Charter had had a controlling stake in Downe for several years prior. The year before, Downe had acquired Bartell
, the publisher of such magazines as Sport
.
Charter acknowledged that in 1978 and 1979, two of its oil executives had discussions with fugitive financier Robert Vesco
; Mr. Vesco and Mr. Mason had business discussions as far back as 1971. Vesco was living in the Bahamas and had declined requests that he return to the U.S. to face charges that he swindled investors out of millions of dollars. The Senate Judiciary Committee was investigating connections between Billy Carter
, brother of President Jimmy Carter
, Vesco, and the country of Libya
.
Carey Energy Corporation, with $550 million in assets, was acquired by Charter in 1979 for $4 million is cash, $16 million in Charter convertible preferred stock and a consulting job for Edward M. Carey paying $200,000 per year. Carey Energy’s principal assets were a 65% ownership in a Bahamas Refinery and the New England Petroleum Company, a fuel oil distributorship based in Brooklyn which sold the fuel produced by the refinery up and down the Atlantic coast.
In 1980, Charter decided to buy Commonwealth Oil Refining Co. and their Puerto Rican refinery, which processed 160000 bbl (25,437,967.2 l). per-day, for $650 million. The company also had plans to build a 100000 bbl (15,898,729.5 l). per-day refinery in Alaska to process the 75000 bbl (11,924,047.1 l). per-day of North Slope crude that they were promised.
was the former estate of Alfred I. du Pont
and Jessie Ball du Pont, Ball’s sister. The Mason mansion, which Mason still owns, is a castle in Ballynahinch, County Galway
, Ireland
, and was once owned by Ed Ball.
That year, Jack Donnell began eliminating some of the communications and publishing properties and whittled down the list of subsidiaries to a level the company could function with.
Charter had net earnings of $53.89 million, or $2.01 a share in 1983.
In 1984, the company reported a net loss of $749.34 million, $685 million of which the company attributed to discontinued operations, the expenses of filing for bankruptcy and provisions for estimated losses on disposal of assets which were partially offset by gains on assets sold.
Zeke Zechella
, who had joined Charter in 1980 after leaving Offshore Power Systems
, was named president of Charter, replacing Donnell.
Independent Petrochemical Corporation (IPC), was a wholly owned subsidiary of Charter Oil. On several occasions, and as a courtesy to a customer, IPC arranged for the disposal of waste oil by a St. Louis waste oil hauler, Bliss Oil, with the understanding that Bliss would take the oil to a waste disposal site. In actuality, after Bliss Oil's president tasted the oil to check its suitability for other uses and found the flavor fit, Bliss sprayed it as a dust suppressant at various locations throughout Missouri. The sprayings occurred over a period of at least two months, with each spraying lasting about 30–40 minutes. The waste oil contained dioxin, a chemical compound that was a known carcinogen
. The discharge of the dioxin-contaminated oil was the basis of claims against IPC by the federal government, the State of Missouri, and over 1,600 private plaintiffs. The private suits sought an aggregate $4 billion in compensatory damages and an identical amount in punitive damages. IPC entered into settlements covering all of the claims which included over $100 million owed to the federal government for clean-up of various sites in Missouri.
At the time, Carey's bear (Carey Energy) had been in a prolonged mauling mood because he was unable to feed it (obtain a source of crude oil for the refinery). Five years later, the bear was hungry and got angry again.
One of the primary reasons for Charter's bankruptcy was the financial market. Oil prices dropped sharply and companies lost their ability to get trade credit, so they were unable to purchase crude oil (feed the bear) and that forced Charter into Chapter 11, according to Mason.
The Charter Company and 43 subsidiaries (including IPC) filed for protection under Chapter 11
of the bankruptcy law on April 20, 1984.
In conjunction with the Bankruptcy filing, the company laid off 200 people in its Jacksonville office—which represented almost a 50% loss—and an equal number in Houston.
Mason sold Epping Forest to Herb Peyton
in 1984 and resigned as Charter's Chairman. Company president Zeke Zechella retired the following year. Most of the company's subsidiaries were sold off before emerging from court protection in 1987. Creditors received Charter stock representing a 50.5% ownership in the company in payment for Charter's debts. Carl Lindner acquired control of Charter in bankruptcy court.
One notable element of Charter's bankruptcy was stockholder equity. Typically, company stock would be worthless, but Jacksonville attorney Stephen Busey, who represented Charter in the legal proceedings, stated that it is unusual for shareholders to get as much value as Charter's stockholders did.
.
In early 1992, Charter announced an agreement to sell all remaining oil operations in a management buyout. That transaction left Charter with one business, an 82% stake in Spelling Entertainment
, the television production company that produced over a dozen popular drama series.
Entertainment giant Viacom
purchased the last remaining asset in 1999. Current-day American cable company Charter Communications
is completely unrelated to Charter Company.
Jacksonville, Florida
Jacksonville is the largest city in the U.S. state of Florida in terms of both population and land area, and the largest city by area in the contiguous United States. It is the county seat of Duval County, with which the city government consolidated in 1968...
was a conglomerate with more than 180 subsidiaries that was in the Fortune 500
Fortune 500
The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks the top 500 U.S. closely held and public corporations as ranked by their gross revenue after adjustments made by Fortune to exclude the impact of excise taxes companies collect. The list includes publicly and...
for 11 years beginning in 1974 and ranked 61st in 1984 before it sought bankruptcy protection in late 1984 and spiraled into obscurity.
History
The Charter Company was started in Jacksonville, Florida in 1949 by Jacksonville native, Raymond Knight MasonRaymond K. Mason
Raymond K. Mason has been an American business leader for nearly sixty years, almost 40 as head of the Charter Company in Jacksonville, Florida. Charter was in the Fortune 500 for 11 years beginning in 1974 and ranked 61st in 1984.-Personal life:...
, just graduated from college. The company’s roots were from the Mason Lumber Company, founded in 1919.
Edward Ball, a powerful figure in Florida business and politics for decades, was Mason’s friend and mentor. Ball worked for Alfred I. du Pont
Alfred I. du Pont
Alfred Irénée du Pont was an American industrialist, financier and philanthropist. A member of the influential Du Pont family, Alfred du Pont first rose to prominence through his work in his family's Delaware-based gunpowder manufacturing plant, E. I...
for nine years as a business associate before du Pont’s death in 1935, then managed the trust’s assets for another 46 years.
Charter started with a group of Florida mortgage, banking and land-developing firms. The company then bought 60 small gas stations in 1968.
In 1970, Charter purchased a petroleum operation for $70 million from the Signal Companies
AlliedSignal
AlliedSignal was an aerospace, automotive and engineering company that acquired and merged with Honeywell for $15 billion in 1999, after which the new group adopted the Honeywell name.AlliedSignal was created through a 1985 merger of Allied Corp...
. Included in the deal was a small gasoline refinery in Houston, Texas
Houston, Texas
Houston is the fourth-largest city in the United States, and the largest city in the state of Texas. According to the 2010 U.S. Census, the city had a population of 2.1 million people within an area of . Houston is the seat of Harris County and the economic center of , which is the ...
in need of updating, a string of gas stations in the Southeast and a handful of questionable tanker contracts. Four years later, when the Arab Oil Embargo
1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...
struck, Charter cashed in.
Also in 1970, congress repealed an exemption which allowed charitable trusts to control banks, forcing the du Pont Trust to divest itself of the Florida National Bank Group
Florida National Bank
Florida National Bank , founded in 1905, grew to became the second largest commercial bank in Florida. Florida National Group was acquired in 1990 by First Union Corporation, which was renamed Wachovia in 2001.-Early years:...
, which Charter purchased. Charter also owned 8.4% of the St. Joe Paper Company, one of the largest assets in the du Pont Trust, while St. Joe owned 22% of Charter. The two companies exchanged shares in 1972 with the intention of merging.
Senator Joseph Tydings
Joseph Tydings
Joseph Davies Tydings is a former Democratic member of the United States Senate, representing the state of Maryland from 1965 to 1971....
was an investment partner in Charter since 1964 with $2 million in equity. At one time, Tydings was the largest Charter stockholder outside of the Mason family. A Life Magazine article in 1970 suggested that the senator used his influence to assist Charter in business deals, but no laws were broken.
In 1975, Charter purchased Redbook
Redbook
Redbook is an American women's magazine published by the Hearst Corporation. It is one of the "Seven Sisters", a group of women's service magazines.-History:...
from Norton Simon
Norton Simon
Norton Winfred Simon , in the United States was a millionaire industrialist and philanthropist based in California. A significant art collector, he is the namesake of the Norton Simon Museum in Pasadena, California.-Early life:...
Inc. In 1978, Charter acquired Downe Communications
Downe Communications
Downe Communications was a publishing company founded by Edward Downe, Jr. that produced several popular magazines and provided subscription fulfillment services from 1967 to 1978....
, the publisher of the Ladies' Home Journal
Ladies' Home Journal
Ladies' Home Journal is an American magazine which first appeared on February 16, 1883, and eventually became one of the leading women's magazines of the 20th century in the United States...
. Charter had had a controlling stake in Downe for several years prior. The year before, Downe had acquired Bartell
Macfadden Publications
Macfadden Communications Group is a publisher of business magazines. It has a historical link with a company started in 1898 by Bernarr Macfadden that was one of the largest magazine publishers of the twentieth century.-Macfadden Publications:...
, the publisher of such magazines as Sport
Sport (magazine)
Sport is a free French and London-based weekly sports magazine. It specialises in football, rugby, and tennis, together with handball in France and cricket in London...
.
Charter acknowledged that in 1978 and 1979, two of its oil executives had discussions with fugitive financier Robert Vesco
Robert Vesco
Robert Lee Vesco was a fugitive United States financier. After several years of high stakes investments and seedy credit dealings, Vesco was alleged guilty of securities fraud. He immediately fled the ensuing U.S...
; Mr. Vesco and Mr. Mason had business discussions as far back as 1971. Vesco was living in the Bahamas and had declined requests that he return to the U.S. to face charges that he swindled investors out of millions of dollars. The Senate Judiciary Committee was investigating connections between Billy Carter
Billy Carter
William Alton "Billy" Carter III was an American businessman who promoted Billy Beer, was a candidate for Mayor of Plains, Georgia, and was the younger brother of United States President Jimmy Carter.-Early years:...
, brother of President Jimmy Carter
Jimmy Carter
James Earl "Jimmy" Carter, Jr. is an American politician who served as the 39th President of the United States and was the recipient of the 2002 Nobel Peace Prize, the only U.S. President to have received the Prize after leaving office...
, Vesco, and the country of Libya
Libya
Libya is an African country in the Maghreb region of North Africa bordered by the Mediterranean Sea to the north, Egypt to the east, Sudan to the southeast, Chad and Niger to the south, and Algeria and Tunisia to the west....
.
Carey Energy Corporation, with $550 million in assets, was acquired by Charter in 1979 for $4 million is cash, $16 million in Charter convertible preferred stock and a consulting job for Edward M. Carey paying $200,000 per year. Carey Energy’s principal assets were a 65% ownership in a Bahamas Refinery and the New England Petroleum Company, a fuel oil distributorship based in Brooklyn which sold the fuel produced by the refinery up and down the Atlantic coast.
In 1980, Charter decided to buy Commonwealth Oil Refining Co. and their Puerto Rican refinery, which processed 160000 bbl (25,437,967.2 l). per-day, for $650 million. The company also had plans to build a 100000 bbl (15,898,729.5 l). per-day refinery in Alaska to process the 75000 bbl (11,924,047.1 l). per-day of North Slope crude that they were promised.
Operations
The company was split along three lines: Oil Refining, Insurance and Communications.| Year | Revenue | Net Earnings | Earnings Per Share |
|---|---|---|---|
| 1973 | $481,900,000 | $20,500,000 | $4.61 |
| 1974 | $1,170,000,000 | $40,300,000 | $10.71 |
| 1975 | $1,046,200,000 | $5,400,000 | $.19 |
| 1976 | $1,190,900,000 | $16,900,000 | $.81 |
| 1977 | $1,481,600,000 | $20,000,000 | $1.00 |
| 1978 | $2,046,300,000 | $23,300,000 | $1.17 |
| 1979 | $4,296,400,000 | $365,300,000 | $14.83 |
| 1980 | $4,421,100,000 | $50,200,000 | $1.59 |
| 1981 | $4,966,200,000 | $7,700,000 | $.06 |
| 1982 | $4,017,200,000 | $35,300,000 | $1.04 |
| 1983 | $5,656,800,000 | $61,700,000 | $2.35 |
| 1984 | ($29,800,000) | ($71,100,000) | $0 |
| 1985 | $1,559,700,000 | $1,300,000 | $0 |
| 1986 | $1,136,300,000 | $153,200,000 | $3.23 |
| 1987 | $1,042,600,000 | $46,900,000 | $.98 |
| 1988 | $479,600,000 | $58,600,000 | $1.22 |
| 1989 | $665,100,000 | $5,300,000 | $.10 |
Raymond Knight Mason
Mason had a reputation for eccentricity, but employees said he had "his own ways." Mason owned two special properties, both of which were acquired through his friend, Ed Ball. Epping ForestEpping Forest (Jacksonville, Florida)
Epping Forest was an historic, estate in Jacksonville, Florida where a luxurious riverfront Mansion was built in the mid-1920s by industrialist Alfred I. du Pont and his third wife, Jessie Ball du Pont. It was added to the U.S...
was the former estate of Alfred I. du Pont
Alfred I. du Pont
Alfred Irénée du Pont was an American industrialist, financier and philanthropist. A member of the influential Du Pont family, Alfred du Pont first rose to prominence through his work in his family's Delaware-based gunpowder manufacturing plant, E. I...
and Jessie Ball du Pont, Ball’s sister. The Mason mansion, which Mason still owns, is a castle in Ballynahinch, County Galway
Ballynahinch, County Galway
Ballynahinch or Ballinahinch is situated close to Recess in County Galway in the West of Ireland, on the road from Recess to Roundstone. It also lies on the route of the former railway line from Galway city to Clifden...
, Ireland
Ireland
Ireland is an island to the northwest of continental Europe. It is the third-largest island in Europe and the twentieth-largest island on Earth...
, and was once owned by Ed Ball.
Performance
The company had sales totaling about $5 billion in 1981, while their earnings were $.06 per share, the lowest point in a decade. The drop was attributed to the oil glut, which drove down prices.That year, Jack Donnell began eliminating some of the communications and publishing properties and whittled down the list of subsidiaries to a level the company could function with.
Charter had net earnings of $53.89 million, or $2.01 a share in 1983.
In 1984, the company reported a net loss of $749.34 million, $685 million of which the company attributed to discontinued operations, the expenses of filing for bankruptcy and provisions for estimated losses on disposal of assets which were partially offset by gains on assets sold.
Copter crash
The Charter Company suffered a tragedy in the foggy, early hours of July 29, 1982 when four senior executives died in Ireland when their helicopter crashed in route from Mason's castle to Shannon International Airport. Killed were Jack T. Donnell, 53, Charter's president and chief operating officer and three from Charter Oil: Dudley K. Parker, 49, president; Barry L. Green, 34, executive vice president; and Jay L. Lammons, 43, senior vice president.Zeke Zechella
Zeke Zechella
Alexander Philip "Zeke" Zechella was a United States Navy veteran and pioneer in the usage of nuclear energy who headed several major companies before retiring in Jacksonville, Florida and assisting local non-profit agencies....
, who had joined Charter in 1980 after leaving Offshore Power Systems
Offshore Power Systems
Offshore Power Systems was a 1970 joint venture between Westinghouse Electric Company, which constructed nuclear generating plants, and Newport News Shipbuilding and Drydock, which had recently merged with Tenneco, to create floating nuclear power plants at Jacksonville, Florida.-History:The MH-1A...
, was named president of Charter, replacing Donnell.
Lawsuit
A lawsuit was filed on December 16, 1983 seeking more than $1.8 billion in damages. The Charter Company dba Charter Oil Company of Jacksonville were one of four companies named as defendants.Independent Petrochemical Corporation (IPC), was a wholly owned subsidiary of Charter Oil. On several occasions, and as a courtesy to a customer, IPC arranged for the disposal of waste oil by a St. Louis waste oil hauler, Bliss Oil, with the understanding that Bliss would take the oil to a waste disposal site. In actuality, after Bliss Oil's president tasted the oil to check its suitability for other uses and found the flavor fit, Bliss sprayed it as a dust suppressant at various locations throughout Missouri. The sprayings occurred over a period of at least two months, with each spraying lasting about 30–40 minutes. The waste oil contained dioxin, a chemical compound that was a known carcinogen
Carcinogen
A carcinogen is any substance, radionuclide, or radiation that is an agent directly involved in causing cancer. This may be due to the ability to damage the genome or to the disruption of cellular metabolic processes...
. The discharge of the dioxin-contaminated oil was the basis of claims against IPC by the federal government, the State of Missouri, and over 1,600 private plaintiffs. The private suits sought an aggregate $4 billion in compensatory damages and an identical amount in punitive damages. IPC entered into settlements covering all of the claims which included over $100 million owed to the federal government for clean-up of various sites in Missouri.
Bankruptcy
When Edward M. Carey sold Carey Energy Corporation to Charter in 1979, his comment was: "Being in the oil business is like having a bear by the tail. You have to keep feeding it. You have to feed it to get it to perform."At the time, Carey's bear (Carey Energy) had been in a prolonged mauling mood because he was unable to feed it (obtain a source of crude oil for the refinery). Five years later, the bear was hungry and got angry again.
One of the primary reasons for Charter's bankruptcy was the financial market. Oil prices dropped sharply and companies lost their ability to get trade credit, so they were unable to purchase crude oil (feed the bear) and that forced Charter into Chapter 11, according to Mason.
The Charter Company and 43 subsidiaries (including IPC) filed for protection under Chapter 11
Chapter 11, Title 11, United States Code
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
of the bankruptcy law on April 20, 1984.
In conjunction with the Bankruptcy filing, the company laid off 200 people in its Jacksonville office—which represented almost a 50% loss—and an equal number in Houston.
Mason sold Epping Forest to Herb Peyton
Herb Peyton
Herbert Hill "Herb" Peyton is an American entrepreneur and founder of Gate Petroleum in Jacksonville, Florida, which had sales of $1.44 billion in 2008...
in 1984 and resigned as Charter's Chairman. Company president Zeke Zechella retired the following year. Most of the company's subsidiaries were sold off before emerging from court protection in 1987. Creditors received Charter stock representing a 50.5% ownership in the company in payment for Charter's debts. Carl Lindner acquired control of Charter in bankruptcy court.
One notable element of Charter's bankruptcy was stockholder equity. Typically, company stock would be worthless, but Jacksonville attorney Stephen Busey, who represented Charter in the legal proceedings, stated that it is unusual for shareholders to get as much value as Charter's stockholders did.
A long, drawn out ending
Charter vanished from Jacksonville's headlines and former employees found positions at other businesses when the bankruptcy was discharged in 1988. Carl Lindner’s American Financial Corporation, which owned 53% of Charter’s stock, moved the company from Jacksonville to Cincinnati, OhioCincinnati, Ohio
Cincinnati is a city in the U.S. state of Ohio. Cincinnati is the county seat of Hamilton County. Settled in 1788, the city is located to north of the Ohio River at the Ohio-Kentucky border, near Indiana. The population within city limits is 296,943 according to the 2010 census, making it Ohio's...
.
In early 1992, Charter announced an agreement to sell all remaining oil operations in a management buyout. That transaction left Charter with one business, an 82% stake in Spelling Entertainment
Spelling Television
Spelling Television Inc. was a television production company that produced popular shows such as Charmed, Beverly Hills, 90210, 7th Heaven, Dynasty and Melrose Place. The company was founded by television producer Aaron Spelling in 1969...
, the television production company that produced over a dozen popular drama series.
Entertainment giant Viacom
Viacom (1971–2005)
Viacom , stylized as VIACOM in its current logo, was an American media conglomerate. It was the owner of CBS, Nickelodeon & MTV, among others. Effective December 31, 2005, this corporate entity changed its name to CBS Corporation...
purchased the last remaining asset in 1999. Current-day American cable company Charter Communications
Charter Communications
Charter Communications is an American company providing cable television, high-speed Internet, and telephone services to more than 4.7 million customers in 25 states. By revenues, it is the fourth-largest cable operator in the United States, behind Comcast, Time Warner Cable, and Cox Communications...
is completely unrelated to Charter Company.