Posted on: Wednesday, June 4, 2003

Banks quarrel over vote results

By John Duchemin
Advertiser Staff Writer

One week after CB Bancshares shareholders voted to reject a hostile takeover attempt by local rival Central Pacific, the banks are arguing over the legitimacy of the results.

Central Pacific Bank yesterday questioned whether enough shareholders voted to reach a quorum, demanded CB Bancshares open its ballots for inspection, and hinted it may challenge the vote in court.

Also yesterday, CB Bancshares released more information on the May 28 vote, at which a minority of the bank's shares actually voted, and said a "preliminary tally" reinforces its position the vote is legitimate.

The May 28 vote was the first by CB Bancshares shareholders on the $275 million hostile bid, which was made public in mid-April. The vote, called by CB Bancshares, is one of a series of procedural hurdles for Central Pacific.

At the vote, about 29.4 percent of CB Bancshares' total shareholders voted to reject the merger, while about 13.4 percent voted to approve it. About 2.6 percent of shareholders abstained. That represented about 45 percent of the total shareholders — normally, not enough to reach the 50-percent quorum.

But in calculating the quorum, CB Bancshares excluded shares owned by Central Pacific and TON Finance, a Dutch investment firm that supports Central Pacific. That removed about 11 percent of shares from the count. CB Bancshares said yesterday that 50.33 percent of eligible shareholders — all except Central Pacific and TON — voted in the May 28 vote, meaning the vote passed the 50 percent threshold for quorum. CB Bancshares claims the vote represents a victory.

Central Pacific said there are "significant unresolved issues" relating to the vote.

"By its own admission, fewer than 50 percent of CBBI (CB Bancshares) shareholders participated in the May 28 meeting, and fewer than 30 percent were against the proposal," Central Pacific said. "When two-thirds of CBBI's shareholders either supported our proposal or did not participate in this election, it is incredible that CBBI characterizes this as a victory."

The next step is likely a Central Pacific court challenge of the vote.