City Bank wins vote
to block mergerThe outcome is still in doubt
as questions are raised on the
numbers and validity of the vote
The biggest banking war in state history drew fire from both sides today as City Bank shareholders overwhelmingly and expectedly rejected a proposal that could have led to a merger of the 44-year-old institution.
The special shareholders meeting at Dole Cannery wasn't devoid of theatrics as attorneys from the two banks engaged in a heated floor debate after Chairman Lionel Tokioka of parent CB Bancshares Inc. announced that a quorum had been met. The spirited verbal exchange led to a 10-minute recess before the preliminary voting tally was released.
Tokioka subsequently announced a proposal allowing Central Pacific Financial Corp. to acquire at least a majority of CB shares had been defeated with only 15 percent of the shares voting in favor of the proposal.
Later, in a news conference, CB said 33 percent of the shares had voted against the proposal with 3 percent abstaining. Including the 15 percent voting in favor of the proposal, CB received votes from 51 percent of the outstanding shares. A majority of the outstanding shares as of the May 5 record date was needed to obtain a quorum and validate the results.
The outcome was expected since CPF had been instructing CB shareholders not to vote in the hope of preventing a quorum. And, in keeping with the tone of the rest of the merger attempt, CPF contested CB's claim that a quorum had been met.
"Obviously, there's a serious question with the integrity of the process and it's rather suspicious that they claim a quorum but they refuse repeatedly to offer what the numbers are," said CPF attorney Gordon Bava, who was seeking the preliminary vote totals. "It's a very simple question."
CB attorney Fred White, who kept insisting that the vote would be released when it was finalized, refused to give in to Bava's demands.
Bava then demanded that White sit down and stop intimidating him.
White said later he expects CB to keep litigating if CPF doesn't back down on its takeover attempt. He also said final vote results will be available June 6.
CPF said all shares as of the record date should be counted in determining a quorum, while CB said CPF's 2.3 percent of CB shares and the 8.9 percent of shares controlled by Ton Finance, CB's largest shareholder, shouldn't count. The fewer shares that count toward a quorum, the easier it is for CB to reach a majority of the eligible votes.
CPF, which has called its own CB shareholders meeting for June 26, said it will keep fighting.
"It doesn't matter," Bava said. "Central Pacific is going to continue on with this process. This is only a minor sideshow in the process, and a lot of things are continuing on with regulators and other agencies. At some point the other shareholders will have an opportunity to express their view in an open, honest and fair meeting, and not the show meeting they had today with the planted questions."
Ronald Migita, CB's president and chief executive officer, said he was pleased with today's results and that as far as he's concerned the shareholders have had their say.
The nasty proxy fight has rivaled a political campaign with its full-page newspaper ads, radio messages and telephone solicitations.
Today's shareholders meeting was allowed to proceed after CB withstood two challenges in state Circuit Court over the past two weeks.
In the first case, Judge Victoria Marks denied a CPF motion for a temporary restraining order that would have postponed the meeting. CPF later withdrew its motion for a preliminary injunction.
Last week, Marks denied a motion for a preliminary injunction by CB shareholder Barbara Clarridge.
CPF had tried to get the meeting postponed because it claimed there wasn't enough time for CB shareholders to receive proxy material, study it and then respond with their vote.
CPF also said a sweetened bid it made on May 9 represented a new offer and required a new meeting date. CPF chose June 26, but said it is willing to pick another date that is acceptable to both sides.