City Bank stands fast
on date of meetingA shareholder seeks a court injunction
to delay the merger meeting
The parent of City Bank, refusing to blink first in an ongoing merger standoff, informed Central Pacific Financial Corp. yesterday it would not agree to its rival's demand to push back the date of a special shareholders meeting.
CB Bancshares Inc., which on Sunday unanimously rejected CPF's $285 million hostile takeover offer, said the May 28 meeting date is within the time frame permitted by state law and that it would not move the date to June 19 as demanded by the parent of Central Pacific Bank. CPF had given CB Bancshares a deadline of noon yesterday to move the date or face unspecified repercussions.
However, CB Bancshares' decision to retain the date may not be the last word. Honolulu attorney James Bickerton lodged a motion in state Circuit Court on behalf of plaintiff Barbara Clarridge and other class members late yesterday seeking a preliminary injunction to halt the May 28 meeting. Circuit Court Judge Gary Chang has been assigned to hear the case, but no date is set.
"We're asking the court to block the shareholders meeting from taking place until shareholders have had an opportunity to get the required information to make an adequate judgment and to arrange for their proxies," said Bickerton, who has declined to reveal any information about his client.
Meanwhile, CB Bancshares, which had been relatively quiet for seven weeks while it digested the offer, began going on the offensive.
"CPF's attempt to portray CB Bancshares' shareholders as uninformed about the takeover proposal is disingenuous, given that CPF has flooded the marketplace with full-page newspaper ads, investor calls and presentations, media interviews and numerous press releases, in addition to making personal visits to CB Bancshares' shareholders," CB Bancshares said.
Central Pacific had argued that the date needed to be pushed back to meet the legal requirement for sending out proxy materials within 20 business days of the May 28 date. More importantly, CPF said, it wanted to make sure that CB Bancshares' shareholders had enough time to review the merger proposal and to respond. CPF had called for the special meeting under Hawaii law because it wanted to acquire more than 10 percent -- and ultimately more than 50 percent -- of CB Bancshares stock as a step toward completing a merger.
CB Bancshares, however, accused CPF yesterday of being "irresponsible" about the 20 business days because CB Bancshares said that time frame applied to annual shareholder meetings and not to a special meeting of shareholders. CB Bancshares quoted an excerpt from the Securities Exchange Act that said for special meetings, the inquiry must be initiated as many days before the meeting "as is practicable."
Central Pacific said yesterday it wasn't ready to reveal its next step.
"We're exploring our options and are not ready to make any comments at this time," Central Pacific said in a statement.
Analyst Peter Kovalski, whose investment firm, Saxon Woods Advisors, owns 5,000 shares of CB Bancshares' stock, said he thinks the bank saga is closer to the beginning than to the end.
"This is the first act of a long program, and if (Central Pacific) really continues to want to make this happen, things will start to get uglier," Kovalski said. "If, for some reason, (Central Pacific) decides to back away and the stock were to decline, there's a potential for lawsuits if there's any reason there's been a breach of fiduciary responsibility on the part of CB Bancshares' board and senior management, and (that) the primary reason (for rejecting the deal) was just to protect their jobs."
CB Bancshares also accused Central Pacific of being lax about giving CB Bancshares shareholders enough time to review the material. CB Bancshares said it provided Central Pacific a list of CB Bancshares shareholders on April 21, nearly 40 days before the date of the special meeting.
In a letter to Central Pacific's general counsel, Glenn Ching, CB Bancshares Chief Financial Officer Dean Hirata chided its rival for dragging its heels.
"Had you acted in a timely manner, you already would have mailed to our shareholders materials you consider relevant to their decision making, including a preliminary proxy statement," Hirata said.
Central Pacific repeated its previous assertions that CB Bancshares is depriving CB shareholders of making an informed decision.
"We strongly believe that CBBI shareholders should have a fair opportunity to receive and review our offer of the merger proposal," Central Pacific said. "We will continue to do what we can to get shareholders a voice in the future of their company.
"Just as we take our voting rights seriously as citizens, shareholder democracy should be an open and fair process."
CB Bancshares, though, once again implored CPF to respect its decision and to halt the takeover attempt.
"We regret CPF's failure to respect the unanimous decision of our board of directors that CPF's proposal is not in the best interests of CB Bancshares," the company said.
