violations by Central
CPF denies soliciting
too many shareholders
before distributing proxies
CB Bancshares Inc., which has been trying to fend off a hostile takeover from Central Pacific Financial Corp., went on the offensive yesterday and said it is investigating whether its rival committed any federal securities law violations in pursuing its merger attempt.
The parent of City Bank sent a letter to Glenn Ching, CPF's general counsel, alleging CPF solicited agent designations from more than the 10-person maximum prior to distributing proxy materials. The agent designation gives CPF the right to vote for a CB shareholder.
CPF, however, said it only solicited 10 people and that CB mistakenly counted CPF as an agent designation.
"(That) should be excluded from CBBI's calculations since we did not solicit ourselves," CPF said in a statement last night.
CB said a May 20 letter it received from CPF included the name of a shareholder holding 116,822 shares that represented CPF's 11th agent designation. CB requested that CPF provide all its agent designation information by the end of yesterday.
CB also said in the letter to Ching that it is again rejecting CPF's request to postpone Wednesday's special shareholders meeting. CB said it will not deliver a notice for CPF's proposed June 26 meeting and said any action taken at that meeting will be invalid under Hawaii law.
CPF responded late yesterday with a letter to CB President and Chief Executive Officer Ronald Migita, saying said that the company is "well aware of our obligations under the federal securities law."
In the letter, CPF said CB is legally required to call the June 26 shareholders meeting. CPF said it was in compliance in two different manners to have the meeting called, citing a state acquisitions law that allows shareholders holding 10 percent of the votes to call a special meeting, as well as CB's bylaws that entitle a special meeting to be called by shareholders holding not less than 25 percent of CB's common stock.
"Please immediately provide the legal basis for CB's conclusion that the June 26 shareholders meeting was not properly called," Ching said. "We once again ask you to comply with your legal obligations."
CPF again called for a shareholders meeting that is mutually acceptable to both banks.
"Today's actions are further evidence of CBBI's disregard for shareholder democracy and provide just another reason for CBBI shareholders to discard their white proxy cards for a May 28 meeting at which all shareholders will not have an opportunity to be heard," CPF said.
CB, for its part, has been urging its shareholders to vote "no" on the proxy cards.
The purpose of the meeting is to allow shareholders to vote on CPF's proposed acquisition of a majority of CB's outstanding shares. Meanwhile, a class-action shareholders lawsuit will be heard at 1:30 p.m. tomorrow before state Circuit Court Judge Victoria Marks.
Attorney James Bickerton, representing shareholder Barbara Clarridge, is seeking a preliminary injunction that will halt Wednesday's shareholders meeting. "Our focus has been on the information that shareholders are receiving, and assuring that whenever the meeting happens, the shareholders have enough information," Bickerton said. "Right now, they don't."
CPF, which last week lost its bid for a temporary restraining order that would have effectively halted the meeting, had been scheduled to argue its own preliminary injunction motion today before Marks. However, CPF withdrew its motion Tuesday because it said it had become "an unnecessary distraction." CPF wanted Wednesday's shareholders meeting pushed back so CB shareholders would have more time to receive proxy material, study it and return it with their votes.
Bickerton said Clarridge's suit is about entrenchment and nondisclosure by CB's board and management.
"You don't see (that reaction) if it's nonhostile and not rejected," Bickerton said. "But if somebody's rejecting, the shareholders want to know why -- especially when the offer is 50 percent above the share price. Certainly, it's not surprising that people like Barbara Clarridge want to litigate when things like this happen."
Even though both the Clarridge and CPF suits were filed about two weeks apart, Bickerton said CPF had nothing to do with Clarridge's suit.
"It's just coincidental," Bickerton said. "Central Pacific is not behind our suit in any way. We're completely independent."