Kerr McGee retreats on committments
Didn't you know it was coming.
Redevelopment group files petition against Kerr-McGee
Anthony McDermid
Heidi Rambo Centrella
8/10/2006
Corporate Redevelopment Group LLC filed a petition today against Kerr-McGee Shared Services Company LLC, a wholly owned affiliate of Kerr-McGee Corp., for breach of contract.
The contract, which was entered into on Nov. 3, 2005, provided for CRG acquiring and redeveloping properties owned by Kerr-McGee, a major component of which was the construction of a parking garage near the company’s headquarters.
CRG’s Anthony McDermid, who spent three years working on the deal, said he expected it to close today. However, such was not the case.
Terms of CRG’s deal with Kerr-McGee were negotiated before the sale of Kerr-McGee to Anadarko Petroleum Corp., which did close today.
According to the petition filed in the District Court of Oklahoma County, Kerr-McGee’s actions have, to date, caused CRG “to incur substantial damages.”
“If Kerr-McGee does not honor its obligations under the contract, CRG will suffer damages estimated to exceed $8 million,” it states.
The deal also included redeveloping two vacant properties at 324 N Robinson Ave. and 135 W Robert S. Kerr Ave. into 70 condominiums with 15,000 square feet of street-front retail space, to be known as Braniff Towers, and 70 acres of land located on the south side of the Oklahoma River, between Walker and Western avenues, as well as three parcels of land on Broadway Avenue.
“It’s very disappointing,” said McDermid, confirming a “significant amount of time and money” has been spent on this deal.
As well, financing already was in place.
The Oklahoma City TIF Funding Advisory Panel recommended $1.35 million worth of funds for the development of the condominium project. A Brownfields Redevelopment Loan Fund to the tune of $750,000 was in final review, and a more-than $750,000 commitment from the Murrah Revitalization District Revolving Loan Program was in place.
According to the petition, CRG complied with its obligations under the contract.
“Kerr-McGee, however, embarked on a campaign designed to thwart CRG’s efforts to consummate the projects contemplated by the contract,” the petition states. “A representative of Kerr-McGee even informed CRG, after the proposed merger was announced, that Kerr-McGee Corp.’s new parent company was not interested in proceeding with the projects.”
Kerr-McGee spokesman John Christiansen says the company was willing to perform under the existing contract and believed the company worked in good faith with CRG on the request.
“We stand willing to perform under that contract, but CRG has requested certain terms of that contract be changed,” Christiansen said. “We just reached an impasse, and I really can’t speculate what happens now that a lawsuit has been filed.
“We haven’t been served yet, so I haven’t seen the lawsuit,” Christiansen continued. “We have an existing contract for CRG to build and deliver a parking garage that’s suitable to Kerr-McGee. After the completion of that garage, Kerr-McGee has agreed to deliver to CRG the various properties for redevelopment.”
On June 23, after Kerr-McGee announced its plans to sell to Anadarko, Chief Executive Luke Corbett assured OKCBusiness that the deal with CRG still would go through.
“We’re still in negotiations and we’re going to try to consummate that transaction,” Corbett told OKCBusiness. “We’re very close. I want to see that go forward. And I’m going to do everything I can to make sure it goes forward. I feel good about it, and we’re trying to cross the finish line on that.”
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