Finance: Four in a Lifeboat for Three

• Share

Amid today's increasing pressure for business growth through merger, it is inevitable that some corporate marriages turn out unhappily. Yet divorce, which ends a quarter of the marriages among the nation's people, remains a comparative rarity among companies. Last week, in an unusual split-up intended to revitalize the fortunes of both companies, the oil-realty-finance combine of Sunasco Inc. formally dissolved its ties with subsidiary Sunset International Petroleum Corp.

It did so by selling Sunset Petroleum, which had $20 million worth of losses in California real estate last year and plunged Sunasco deeply into the red. The buyer: Manhattan's Commonwealth United Corp., a movie-making (The Pawnbroker) and -distributing company with realty and insurance sidelines. Price: $25.2 million, paid in Commonwealth stock. In an accompanying deal akin to a divorce settlement, Sunasco lined the coffers of money-shy Sunset with $ 1,000,000 in cash and $8.6 million worth of Sunasco stock-chiefly in exchange for Sunset's interest in five California realty ventures.

The Nth Degree. Along with Sunset, Commonwealth acquired its president, A. (for Austin) Bruce Rozet, 39, and this week it expects to elect him its own $60,000-a-year president and chief executive officer. Against overwhelming odds, Rozet over the past year has steered Sunset away from impending financial disaster. "We're taking our licks publicly," he said not long ago. "We have moved from the nth degree of impossibility as a company to a couple of degrees away from real possibilities."

Sunasco's troubles began almost as soon as the company was created in April 1966 by a merger of Beverly Hills-based Sunset International Petroleum with suburban Philadelphia's Atlas Credit Corp., a mortgage-banking, title-insurance and home-repair finance concern. First, a plan to float $14 million worth of long-term debentures went awry in the 1966 credit squeeze. Then the merger partners, Atlas' John L. Wolgin and Sunset's Morton Sterling, locked horns over how to raise money for the ailing realty side of their operation. Recalls Rozet: "There were four children in the lifeboat, with food enough for three."

In part, Sunasco suffered from a classical pitfall of corporate mergers: split management. With Wolgin and Sterling sharing command, and with a board of directors evenly divided between their supporters, a deadly stalemate persisted while problems mounted. The impasse ended only when both men turned operational control over to Rozet, a onetime production-line engineer for Douglas Aircraft who was then financial vice president of Sunasco. Rozet decided that the only solution was to rip the combine apart again.