CB Bancshares
class-action case
switches judges
A state Circuit Court judge denied a motion yesterday to recuse himself from a class-action lawsuit against CB Bancshares Inc. but said he would recommend transferring the case because of a similar suit currently before the court.
Attorney James Bickerton, who is representing CB shareholder Barbara Clarridge in the suit, filed a motion seeking to disqualify Judge Gary Chang from hearing the case because Chang chairs two charitable organizations that do business with City Bank and because the judge had taken out two mortgage loans from International Savings & Loan, which has been acquired by City Bank. The nonprofit organizations that Chang chairs are "Law Day Golf" and a charitable group that sponsors a golf tournament to raise funds for McKinley High School.
Chang denied the motion because he said City Bank was merely used as a check depository for funds out of which disbursements were paid for both tournaments' activities. Chang also said that despite what state records indicate, he has refinanced his mortgages with Bank of America.
Still, Chang said he would ask that the case be reassigned because of a similar case involving Central Pacific Financial Corp.'s takeover attempt of CB that began last week in front of Judge Victoria Marks. Chang said he was requesting 1:30 p.m. Friday for the class-action case to be heard in front of Marks, who will be hearing the other similar case at 1:30 p.m. Thursday.
In another development, a top executive from financial services firm Keefe, Bruyette & Woods Inc. sent an apology letter yesterday to CB Chief Financial Officer Dean Hirata in response to a financial analysis made by KBW Managing Director Kathleen Smythe.
"It is not KBW's policy for investment banking work product to be used in this manner and we retract the analysis," said Andrew Senchak, president and head of investment banking at KBW. "The analysis is based upon numbers which are inconsistent with those used by Central Pacific and were not subject to due diligence or conversations with management of CB Bancshares."
The analysis, given to the media by a Los Angeles-based public relations firm working with CPF, used earnings-per-share numbers considerably lower than CPF's own estimates for CB. The results calculated by Smythe indicated it would take CB's stock four years to regain current levels if the proposed merger falls through. Hirata, who disputed the findings, accused Clint Arnoldus, chairman, president and chief executive officer of CPF, of lying and providing false and misleading information.
The two cases expected to go before Marks are similar yet slightly different.
In the CPF suit against CB, CPF is seeking the cancellation of CB's May 28 shareholders meeting. CPF said a new merger offer for CB made that meeting moot and that the date didn't allow enough time for CB shareholders to respond to proxy material. Last week, Marks denied CPF's request for a temporary restraining order but set Thursday's date to hear arguments for a preliminary injunction that still could halt the meeting.
In the class-action suit, Clarridge is asking CB's management to get together with CPF so that CB's management and board can better understand the offer and provide full disclosure to shareholders.
CPF, which is calling for a June 26 meeting, said it won't send a proxy to CB shareholders for the May 28 meeting. However, CPF sent a letter to CB shareholders Saturday urging the shareholders not to vote at the May 28 meeting but to wait until they receive a proxy for the June meeting.
In both cases, the purpose of the meetings are to vote on CPF's proposed acquisition of a majority of CB's outstanding shares.
Ronald Migita, CB's president and CEO, sent a letter yesterday to Arnoldus saying among other things that CPF wasn't allowed by state law to call the June 26 meeting.