Thursday, April 26, 2001

Bankoh parent
sells Australian
bank stake

Pacific Century will get a
reported $20 million for the
shares and $16 million
for convertible notes

By Russ Lynch

Pacific Century Financial Corp., in a quick follow-up to its announced plans to exit offshore operations, has sold its 3-year-old investment in an Australian bank.

Bank of Hawaii The Bank of Hawaii parent said yesterday it has agreed to sell its 6.2 million shares of Bank of Queensland common stock to a private Australian investor. The Hawaii company also sold 5.4 million Bank of Queensland convertible notes back to the Australian regional bank.

Pacific Century did not disclose the terms but Bloomberg News Service quoted a national newspaper, the Australian, as saying the price for the stock was $40 million Australian, equal to just over $20 million in U.S. currency. Bank of Hawaii, Pacific Century's main subsidiary, paid $23 million for the shares in 1998.

The shares were 10 percent of Bank of Queensland's common stock. The notes that were returned had a face value of $31 million Australian, or about $16 million U.S., but neither bank disclosed the exact terms of the transfer.

Because the notes were convertible into Bank of Queensland shares, they brought Pacific Century's holdings to the equivalent of 17 percent of Bank of Queensland, which has had a cooperative relationship with Bank of Hawaii since 1997.

"This action conforms to our strategic intentions and we intend to redeploy the capital realized from this transaction toward meeting other key objectives," said Richard Dahl, Pacific Century president.

On Monday, Pacific Century's chairman and chief executive officer, Michael O'Neill, announced a new strategic plan to dispose of nearly all assets outside Hawaii and concentrate on its core business in the islands, reducing its assets over the next couple of years to $9 billion, from the current $14 billion.

In the process, shareholders will be asked to change the name of the company to Bank of Hawaii Corp., to reflect its focus on the islands. Pacific Century said it will sell Encino, Calif.-based Pacific Century Bank N.A., which operates 19 locations in Southern California, as well as sell or close 10 branches and 29 retail locations throughout Asia and the South Pacific.

Pacific Century did not identify the buyer of the Bank of Queensland common shares, but the Australian sources said the buyer was a private investment company called Linfox, controlled by Australian trucking magnate Lindsay Fox.

Pacific Century's stock, which is up 25.2 percent since the start of the year and 12.9 percent over the past 52 weeks, is up 4.7 percent since O'Neill announced the bank's streamlining plan on Monday.

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