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The Honolulu Advertiser

Updated at 12:01 p.m., Wednesday, May 28, 2003

Both banks claim victory after shareholders' vote

By John Duchemin
Advertiser Staff Writer

Shareholders of CB Bancshares today rejected a hostile takeover attempt by Central Pacific Bank, but the ambiguous vote results had both banks claiming victory.
Ronald Migata, president and CEO of CB Bancshares, looks over papers before a press conference that followed a shareholders meeting in which a takeover bid by Central Pacific Bank was rejected.

Richard Ambo • The Honolulu Advertiser

CB Bancshares officials said the vote legitimizes their attempt to stay independent of 24-branch Central Pacific, which is offering shareholders $275 million to take control of its local rival. But they won the vote with the backing of less than 30 percent of their total shares.

Of the total shares, 29.4 percent voted against the proposal and 13.4 percent in favor with 2.6 percent abstaining, according to preliminary results. The rest of the shareholders did not submit their ballots.

"We're absolutely pleased with this result," said Ronald K. Migita, president and chief executive officer of CB Bancshares, owner of 21-branch City Bank. "It shows we have support from shareholders not only in Hawai'i but elsewhere."

Central Pacific, which had called for a boycott of the meeting, also claimed victory, because more than two-thirds of the total shares either supported their position or did not submit a vote.

"This was a show meeting analogous to elections in Cuba," said Gordon Bava, a lawyer with Los Angeles law firm Manatt Phelps & Phillips, representing Central Pacific. "It had the appearance of following proper democratic principles but the intent and result had been pre-determined. We rejected that approach, and we think shareholders responded exactly the way we wanted."

The vote sets up another legal showdown between the two banks, which since April 16 have fought for shareholder support in the courts and the press. Central Pacific claims today's vote is illegitimate because CB Bancshares gave shareholders too little time and information to properly consider the offer.

The would-be buyer, Hawai'i's fourth-largest banking company, is asking for a June 26 meeting to consider a slightly revised offer. That date was rejected as unnecessary by CB Bancshares, Hawai'i's fifth-largest banking company.

"It was Central Pacific's absolute obligation to carry this meeting," said Fred White, a lawyer with New York law firm Skadden Arps Slate Meagher & Flom, representing CB Bancshares. White said it's not safe to assume that the shareholders who refrained from submitting ballots are supportive of Central Pacific.

Bava said Central Pacific is weighing its options and may seek a court order to compel CB Bancshares to hold the June 26 meeting. Like today's meeting, the purpose would be to seek shareholder approval to proceed with the takeover offer. The vote is one of many steps in the long process of acquiring a company.

"At the right time, the shareholders will have another opportunity to express their view in an open and honest way," Bava said. "We believe, based on today's vote, that the vast majority will support it."

The meeting was attended by about 100 people, most of whom were CB Bancshares employees. Several employees spoke in support of CB Bancshares' rejection of the takeover offer, saying it would be bad for stockholders and employees, some of whom would lose their jobs. Central Pacific says it will trim about 10 branches and 200 jobs, or 20 percent of the total, from the combined bank.

Other shareholders in attendance, however, were less supportive. Mark G. Egan, owner of a Chicago investment firm, accused CB Bancshares of failing to provide detailed information to shareholders, including the results of a financial analysis of the deal.

"The fruit of the analysis is something we shareholders need, and we don't have it," Egan said. "We can't get a valuation with the information that they've made available."

Reach John Duchemin at jduchemin@honoluluadvertiser.com or 525-8062.