Posted on: Saturday, May 17, 2003

Delay of City Bank vote denied

By John Duchemin
Advertiser Staff Writer

A state judge yesterday rejected a Central Pacific Bank request to delay a key shareholder vote on its hostile takeover bid for local rival City Bank.

State Circuit Court Judge Victoria Marks' ruling was a victory for City Bank, which is the unwilling target of Central Pacific's $275 million offer.

City Bank parent CB Bancshares wants its shareholders to vote on the takeover bid on May 28. Central Pacific argued that date is too soon to give shareholders enough time to weigh the issues.

Central Pacific on Wednesday sued CB Bancshares, seeking a temporary restraining order that would bar CB Bancshares from issuing voting materials to its shareholders for the May 28 meeting and, in effect, forcing the meeting to be delayed. Central Pacific is pushing for a meeting date in late June.

Marks ruled that Central Pacific didn't prove the restraining order was necessary. If the May 28 meeting goes forward, "is there irreparable injury to Central Pacific? The court finds there really is none," Marks said.

But Marks also gave Central Pacific another chance at making its case and will hear arguments Thursday from both banks on a preliminary injunction to prevent the shareholders' meeting from being held at all.

City Bank officials applauded the ruling on the restraining order. The bank maintains that Central Pacific sued only to buy time to win over City Bank shareholders. Central Pacific, which says it has support from holders of about 25 percent of CB Bancshares shares, needs more than 50 percent to advance the takeover bid.

"We believe that postponing the date of the meeting will only prolong what has become a disruptive, expensive and potentially lengthy takeover battle," said Lionel Y. Tokioka, chairman of the CB Bancshares board. "We continue to urge CB Bancshares shareholders to vote against CPF's hostile attempt."

The ruling was the first litigious step in what is likely to be a complicated legal dance over the takeover offer. City Bank managers have rebuffed Central Pacific's offer, saying it undervalues their bank and is bad for employees and customers.

Although Central Pacific failed to prevent the distribution of voting materials to shareholders, the bank will still fight to change the meeting date at the Thursday hearing, said Crystal Rose, the Honolulu lawyer representing Central Pacific.

Another hearing is scheduled for Friday on a separate lawsuit by City Bank shareholder Barbara Clarridge, who also seeks a preliminary injunction to prevent the shareholders' meeting from going forward. Clarridge accuses City Bank of illegally blocking the takeover attempt.