Central Pacific,
CB Bancshares trade
shots over meetingBoth banks continue a fight over
when they will review shareholder votes
CB Bancshares Inc. and Central Pacific Financial Corp. exchanged salvos again as they appeared to be bracing for another round of court battles.
The parent of City Bank said the earliest it will be able to meet to review results of the May 28 special shareholders meeting will be Wednesday. Central Pacific Bank's parent had sought a meeting yesterday, since CB initially had announced that final results would be released tomorrow. CPF agreed yesterday to meet Wednesday for the review although CPF said it still would prefer an earlier date. The final tally won't be announced until after the review is complete.
In a letter sent to CB President and Chief Executive Officer Ronald Migita, CPF accused him of attempting to further delay the process and called the bank's unavailability "unjustifiable."
CB responded by saying that Clint Arnoldus, CPF's chairman, president and CEO, is attempting "to rewrite the Hawaii Control Share Acquisitions statute by requesting a new meeting based on only a slightly modified merger proposal." CPF is seeking a June 26 meeting to vote on its proposal to acquire a majority of CB's outstanding shares.
CPF wants to challenge the results of the May 28 meeting to see if a quorum was met under CB's interpretation of the rules. CB said it received participation from 50.3 percent of the eligible shares. A quorum is defined as 50 percent plus one of the eligible shares.
"It should be patently obvious that the reason to conduct an inspection is to determine whether CBBI achieved a quorum at its meeting," CPF said in a statement yesterday. "Clearly, that's in question, given the razor-thin margin they have reported.
"Inspections of ballots is a commonplace of shareholder democracy and we can't understand why they have been so hesitant to come to the table."
Regardless of the review's outcome, CPF claims under its interpretation of the state statute that CB fell far short of a quorum, since shares owned by CPF and Ton Finance, CB's largest shareholder, were not counted. CB said it didn't count those votes because CPF "beneficially owned" its shares and had the voting authority over Ton's shares. Counting those shares in the total pool, only 44.7 percent of the shares would be represented in the voting.
If CPF's and Ton's shares were counted, there would be 3,919,388 total shares. Based on that total, 13.3 percent of CB shares would have voted for CPF's proposal, 29.3 percent voted against it and 2.7 percent abstained. CPF pointed out that under this scenario or the one excluding the CPF and Ton votes, two-thirds of CB's shares either voted for the proposal or didn't vote at all. Those shares not voting are important, CPF said, since it had been urging shareholders to withhold their vote until a June 26 meeting it has called.
CB, for its part, has argued that a quorum wasn't necessary no matter what scenario is used because CPF, as the party introducing the proposal, was the one obligated to ensure the quorum.
On the legal front, CB has a summary judgment hearing scheduled for June 17 to try to dismiss previous motions sought by CPF and CB shareholder Barbara Clarridge. Those motions to stop the May 28 meeting were denied but the lawsuits remain active.
Other suits could follow if the May 28 vote review process and the June 26 shareholders meeting are not resolved.