TomatoBank offer nixed by Finance Factors' board
The California-based buyer is weighing its next moves
Officials of California-based TomatoBank's parent company are considering their options after the board of Honolulu-based Finance Enterprises Ltd. rejected an unsolicited buyout offer worth at least $31 million and as much as $62 million.
Finance Enterprises' 13-member board voted unanimously last week to reject an offer by TFC Holding Inc. to purchase at least 51 percent of Finance Enterprises' nearly 62,000 shares at $1,000 a share. In a statement prepared Tuesday, the local company said TFC's "proposals were not acceptable."
Dr. Stephen Liu, chairman and chief executive of Alhambra, Calif.-based TFC Holding, said as of yesterday morning he hadn't seen the rejection letter and that his offer might have been misinterpreted by the board. He said he hadn't received any communication from Finance Enterprises since submitting his offer on Oct. 23 and was informed yesterday by his attorney that the offer had been turned down.
"I think the offer wasn't all that clear," he said. "I wanted to get at least 51 percent (of Finance Enterprises), but I was interested in getting 100 percent."
Finance Enterprises' board mailed a two-sentence letter to Liu last Friday stating the board's decision, according to someone familiar with the letter.
Maureen Lichter, spokes-woman for Finance Enterprises, said yesterday she couldn't comment any further on why the offer was rejected or whether Finance Enterprises would consider a higher offer.
The local company announced earlier this year that it wanted to convert subsidiary Finance Factors, a financial services loan company, into a full-service bank. However, that plan met with opposition from a minority group of shareholders who wanted their holdings bought out before Finance Factors made such a change. Those shareholders and the company went to mediation, but no compromise was reached and no further talks are scheduled. "We still think there's a chance we can reach a mutual agreement at some point," Lichter said.
Privately held Finance Factors, founded in 1952 by the late U.S. Sen. Hiram Fong and five other partners, ended 2005 with $652.7 million in assets.
Fong's bankruptcy estate controls 2,789 shares in Finance Enterprises, or about 4.5 percent of the company. Honolulu attorney Jerrold Guben, who represents the trustee overseeing the estate, said he likely will file a motion in federal Bankruptcy Court next week that would enable Fong's estate to sell its shares.
"We've got other offers for a lower price" than from TomatoBank's parent, without the condition of purchasing at least 51 percent of the shares, Guben said.
Guben said yesterday that Finance Enterprises, and then its individual shareholders, would have the right to match or beat any offers that Fong's bankruptcy estate has received.
TomatoBank, which has five branches in Southern California with $352 million in total assets as of Sept. 30, was founded in 2000 by Liu, an orthopedic surgeon from UCLA. The bank was originally known as InterBusiness Bank, but changed its name in August to TomatoBank.
Finance Factors wants to become a commercial bank so it can offer checking accounts, credit cards, debit cards and trust services, as well as sell property and casualty insurance and life insurance.
Under its current charter, Finance Factors offers real estate-secured residential and commercial loans, savings-secured loans, federally insured savings accounts and several investment vehicles.