The suit seeks to force the
bank to meet with Central
A CB Bancshares Inc. shareholder has filed a class-action lawsuit against the bank demanding it communicate with Central Pacific Financial Corp. in order to make an informed decision about its rival's merger offer.
The complaint, filed on behalf of Barbara Clarridge and other shareholders by Honolulu attorney James Bickerton of Bickerton Saunders & Dang, was submitted late Monday in state Circuit Court. It names CB Bancshares' 10-member board and the bank as defendants.
Clarridge was not identified in any way in the complaint and Bickerton said yesterday he was instructed not to reveal where she lives or how many shares she holds. He said he was told to file the suit by an attorney working with Clarridge. Bickerton also said, to his knowledge, Central Pacific was not involved in initiating the filing of the suit.
The complaint alleges that CB Bancshares' board had the duty to act in the interests of the shareholders, maximize shareholder value, undertake an appropriate evaluation of CB Bancshares' net worth as a merger/acquisition candidate, and act in accordance with its fundamental duties of due care and loyalty. The complaint also said that, at a minimum, the board had the duty to communicate with Central Pacific in order to obtain information necessary to evaluate the offer and make an informed decision.
Named as defendants are board members Donald Andres; Ronald Migita, the president and chief executive officer; Calvin Say; Dwight Yoshimura; Colbert Matsumoto; Chairman Lionel Tokioka; Maurice Yamasato; Tomio Fuchu; Duane Kurisu; Mike Sayama; and CB Bancshares Inc.
CB Bancshares, the parent of City Bank, repeatedly has said it is evaluating the offer with its legal and financial advisers and has not made a decision. But the heart of the complaint was that CB Bancshares, excluding one face-to-face fact-finding meeting on April 2, has ignored Central Pacific's offer to negotiate.
"We are not suing for rejecting (the offer)," Bickerton said. "We are saying they should be talking. When they say they're deciding, I would find that easier to accept if they were talking, because it's not really possible to be deciding without talking. How can you decide in a vacuum without doing due diligence?"
Central Pacific, parent of Central Pacific Bank, said it had no advance notice of the complaint. "It was a legal matter between City Bank and its shareholders," a bank spokeswoman said, declining to comment further.
Attorney Bert Kobayashi, representing CB Bancshares' board of directors, did not return a call.
However, CB Bancshares spokesman Wayne Miyao criticized the complaint.
"We believe that a lawsuit of this nature is inappropriate as our board of directors is carefully considering the Central Pacific proposal and will make the correct decision for CB Bancshares Inc. in due time," he said.
Miyao said Clarridge's name does not appear on CB Bancshares' stockholders list as of March 4, which was the record date for the company's April 24 shareholders meeting. However, Clarridge's holdings could be held by a brokerage and thus be in "street name." The complaint said Clarridge was an owner of CB Bancshares' common stock prior to the initial merger offer.
The complaint said three questions need to be answered. First, it said, is whether CB Bancshares' board has breached its fiduciary duties owed to Clarridge and other class members. Second, whether the board is unlawfully entrenching itself in office and preventing CB Bancshares' shareholders from maximizing the value of their holdings. Third, whether the class is entitled to relief or damages. Bickerton said a preliminary injunction motion would be the next step in this type of suit but acknowledged that obtaining a temporary restraining order offers some challenges.
"It's a little more tricky when you're asking someone to take action," he said. "It's easier to get the court to block something than to force somebody to do something. What we're trying to do in the suit is we would like the directors to take affirmative action and to review the offer. Although they say they have hired experts, in our view there is no way you can properly evaluate an offer unless you talk to the people who are making it."
Central Pacific's offer, originally priced at $70 per share, would give shareholders approximately 30 percent cash and 70 percent of Central Pacific stock in exchange for a share of CB Bancshares stock.
"I don't want to prejudice the ultimate outcome because offers do change," Bickerton said. "I don't want to say one particular offer must be accepted at this point. But I do know they must be negotiated, and they must be evaluated and actively considered and there must be dialogue and those things are not happening."
Bickerton said that if due diligence showed that Central Pacific's proposal was a good offer, "we would certainly be urging to accept," Bickerton said.
In other developments, CB Bancshares said yesterday its board has approved a 10 percent stock dividend, the equivalent of an 11-for-10 stock split, and is increasing its cash dividend 9.1 percent to 12 cents a share from 11 cents a share. The second-quarter dividends will be payable June 27 to stockholders of record June 16.
Also, Central Pacific said today that Nanboku Sangyo, who owns 4.8 percent, or 185,830 shares, of CB Bancshares stock, is publicly supporting the merger. He was the unidentified entity Central Pacific Chief Executive Officer Clint Arnoldus referred to two weeks ago when he talked about receiving additional support from an entity with a 5 percent stake. Earlier, TON Finance B.V., CB Bancshares' largest shareholder with about 9 percent of the shares, filed a proxy in support of the deal. Sangyo did not file a proxy but has designated Central Pacific as its agent to call on its behalf one or more special meetings of CB Bancshares shareholders.
Private Capital Management CEO Bruce Sherman, who controls about 5 percent of CB Bancshares' stock, also previously supported the merger. Central Pacific, with its 2.27 percent of CB Bancshares stock, has received backing from more than 21 percent of CB Bancshares' shareholders.
Central Pacific Bank