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The Honolulu Advertiser
Posted on: Friday, May 16, 2003

Judge to rule today on City Bank meeting

By John Duchemin
Advertiser Staff Writer

A Circuit Court judge will decide this morning whether City Bank will be prevented from holding a May 28 shareholders' meeting on the issue of its takeover.

Central Pacific Bank filed a lawsuit on Wednesday to prevent City Bank from holding the meeting this month and to win more time to persuade shareholders to back its takeover bid.

The two banks were in court yesterday to argue the case. Judge Victoria Marks will announce her decision at an 8:30 a.m. hearing today.

Lawyers for City Bank argued that Central Pacific has had ample time to explain its offer to shareholders. Also, the City Bank lawyers said, a later meeting would only serve to disrupt business.

"Because of the ongoing disruption caused by the hostile takeover attempt, we picked the earliest possible date for the meeting," said Bert T. Kobayashi Jr., a Honolulu lawyer and partner with Kobayashi Sugita & Goda, representing CB Bancshares.

The lawsuit is the first litigious move by either bank as they battle for control of City Bank.

Central Pacific is offering $275 million in cash and stock to buy City Bank parent CB Bancshares. Central Pacific claims to have won over at least 27 percent of CB shareholders with its $70-per-share buyout offer and a plan to increase revenues and cut costs at the combined bank.

On May 9, Central Pacific sweetened its offer, slightly amending the amount of cash and stock that would result from the deal. Central Pacific says the revised offer is different enough that City Bank should cancel the May 28 meeting and reschedule it to June 26.

City Bank contends that the offer is not different enough to warrant a new meeting.

Central Pacific must submit a proxy statement, a government-approved document containing a voting form and prospectus of the proposed deal, to all City Bank shareholders.

But Central Pacific lawyers say the complicated process of locating all City Bank stockholders and mailing the proxies means many would not receive the statements until after the May meeting.

City Bank lawyers say that if shareholders are too confused to approve the offer, it's Central Pacific's fault.

"We don't think ... (Central Pacific) is entitled to relief from confusion if they caused the confusion themselves," Kobayashi said in court.

Marks asked several questions about Central Pacific's contention that it has filed a new offer and therefore deserves a later meeting date. Marks pointed out that Central Pacific neither changed the ultimate value of the offer, which still stands at about $70 per share, nor filed notice of a new offer with state and federal regulators.

Crystal Rose, an attorney representing Central Pacific, replied that the bank thinks the offer is different enough to warrant a later meeting.

Marks said she was concerned that Central Pacific could keep submitting slightly revised offers, and requesting later dates, to buy time.

"If you don't think you succeed, you could cancel the meeting and do a new one; then cancel the meeting again and do another new one - it could go on forever," she said.

Rose said that isn't Central Pacific's intent, and that the bank just wants shareholders to get full information about the takeover offer.