Posted on: Thursday, June 5, 2003

CB Bancshares scraps tomorrow's deadline for final tally

By John Duchemin
Advertiser Staff Writer

Rival banks CB Bancshares and Central Pacific continued to argue yesterday over shareholder voting in which CB Bancshares shareholders rejected Central Pacific's hostile takeover attempt.

CB Bancshares, under pressure from Central Pacific to release details of the vote, said yesterday that it would not meet a self-imposed deadline to disclose a final vote count by tomorrow. The bank did not say when the final results would become available.

CB Bancshares blamed Central Pacific for the delay, saying its rival's "insistence on challenging and reviewing" the vote tally had slowed the process.

The vote was important because Central Pacific needs CB Bancshares shareholder approval to proceed with the takeover.

Central Pacific has claimed that the May 28 vote was illegitimate because CB Bancshares shareholders didn't have enough time to properly consider the $275 million offer. The bank sought a meeting in late June and engineered a boycott, which resulted in holders of about half of CB Bancshares shares refraining from voting.

CB Bancshares maintains that the vote was legitimate, despite the boycott. Only 29.4 percent of CB Bancshares shareholders voted to support their bank's position, 13.4 percent voted in favor of Central Pacific, and 2.6 percent abstained.

The latest issue — the release of the final vote tally — is important because the banks are arguing over whether CB Bancshares made the 50 percent threshold necessary to reach a quorum.

CB Bancshares says it did, claiming that 50.33 percent of what it determined to be "eligible" ballots were cast. CB Bancshares excluded the 11 percent of its shares owned by Central Pacific and Dutch investing firm TON Finance, a key Central Pacific ally in the takeover attempt.

"We're surprised Central Pacific is challenging the tally," CB Bancshares chief financial officer Dean Hirata said yesterday.

"When you get your butt kicked in a football game, you don't keep asking for the final score."

But Central Pacific officials say that it's debatable whether TON Finance and Central Pacific's shares can be excluded when calculating a quorum.

Moreover, they say, the vote, even by CB Bancshares' calculation, reached a quorum by only 11,000 or 12,000 shares — a small enough difference that an inspection is needed to determine whether any votes were miscounted.

"With a razor-thin participation, it seems only logical to determine whether the ballots have been cast accurately," Central Pacific said in a statement yesterday.

Central Pacific has demanded a new vote and hinted it may challenge the May 28 vote in court.

Reach John Duchemin by e-mail at jduchemin@honoluluadvertiser.com or by phone at 525-8062.