CB Bancshares sticks
with refusal to meetCentral Pacific drops its lawsuit over
next week's shareholders' gathering
CB Bancshares Inc.'s management, steadfast in its belief that a merger with rival Central Pacific Financial Corp. is not in the bank's best interest, said yesterday it has no plans to sit down again with its rival.
The reluctance of City Bank's parent to come back to the table has sparked a heated publicity campaign and a legal fight that has resulted in two lawsuits against CB Bancshares.
One of those suits, though, ended yesterday when Central Pacific withdrew its motion for a preliminary injunction that could have halted next Wednesday's special meeting of CB shareholders. The meeting is to allow shareholders to vote on CPF's proposed acquisition of a majority of CB's outstanding shares.
CPF's case was scheduled to be heard tomorrow by state Circuit Court Judge Victoria Marks, who last week turned down CPF's request for a temporary restraining order that would have immediately halted the proxy process for 10 days.
Another suit -- a class action against CB by shareholder Barbara Clarridge -- still is scheduled to be heard at 1:30 p.m. Friday by Marks after being reassigned Monday by Judge Gary Chang. The case was reassigned because Marks already had started hearing arguments from the other suit.
CPF said last night it withdrew its motion because "it has become an unnecessary distraction from the principal issue -- what do shareholders want?"
"We are confident that --at the end of the day -- CPF will receive the approvals it needs to ensure shareholders' wishes are listened to and met," CPF said in a statement. "But it is distressing that CBBI is relying on stalling tactics to disenfranchise its shareholders at a time when we are hearing rising expressions of strong support from those same shareholders."
CPF said yesterday it now has support from 30 percent of CB shareholders who plan to vote for a proposal at a June 26 meeting -- called by CPF -- that will remove one obstacle in merging the two banks.
"We urge CBI shareholders to tell their company's directors what they want by boycotting the May 28 meeting," CPF said. "That meeting is being used by CBBI as a roadblock -- not a pathway -- to shareholder democracy."
CPF also offered to discuss a mutually agreeable meeting date with CB other than the May 28 and June 26 dates that the two banks have scheduled.
"We are happy to discuss whether there is another date that both banks can agree is fair to shareholders," CPF said. "CBBI should join us in putting this unnecessarily contentious and secondary issue behind us so everyone in Hawaii can focus on the offer we're making to CBBI shareholders.
"It would be a good first step toward a more civil dialogue if both companies could reach such an agreement."
CB spokesman Wayne Miyao said last night that CB feels vindicated by CPF's decision to withdraw its lawsuit.
"I think Central Pacific recognized they would lose and therefore the May 28 meeting should go forward," Miyao said. "As far as CB Bancshares goes, we cannot understand why they were trying to avoid the May 28 meeting because we set the date within their parameters."
CB's management, which met yesterday with Star-Bulletin editors and reporters, cited CB's improved credit portfolio and growth prospects, as well as the negative effect of job layoffs and branch closures, as reasons why it is opposed to the merger with Central Pacific Bank's parent. CB, which met with CPF on April 2 to ask questions and gather facts, said it has no incentive to meet again with CB despite numerous overtures from CPF to reconvene.
City Bank President Richard Lim said the last thing CB wants to do is give the impression that the deal is going to happen.
"Their tactic is to litigate and to use the media so anything that gives them an opportunity to do that they will use," Lim said. "If we meet, it will be on the front page of the newspaper. That's not to say we shouldn't meet, but we have to understand where they're coming from, what their tactics are. What's very important to them is to give the impression that this deal is going to happen. Once this deal doesn't happen, everybody starts going, 'Why are you spending these millions of dollars? The whole dynamic changes."
Lim said CB has lost some customers because of the ongoing dispute but said he believes that the public is rooting for CB to prevail.
"I think it's clear to the everyday person on the street we're the underdog and we're being attacked by this guy (CPF chief Clint Arnoldus) from the mainland," Lim said.
CB Chief Financial Officer Dean Hirata, who has said CPF's offer of about $70 per CB share is financially inadequate, said it would be hypothetical to say what a fair offer would be. However, he acknowledged Arnoldus was right in deciding that CB was a valuable commodity.
"There has been a disconnect in the market," Hirata said about the value of CB's stock. "The message that we need to get out to our shareholders is what Mr. Arnoldus, in essence, has already recognized that our company has turned the corner in terms of some of the credit issues that we've had."
Ronald Migita, president and CEO of CB's holding company, said CB needs to focus on the main reasons it's in existence.
"Our job is to run a bank and not fight a hostile takeover battle," Migita said. "We have a business to run. So going forward, we're going to remain focused on our strategy. We've proved we know how to run a bank."