Two Crocker Holders File Suit to Bar Bailout by Midland Bank
Hooper, Molly, American Banker
SAN FRANCISCO -- Two Crocker National Bank shareholders have field a class-action suit seeking to bar a proposed 100% buyout of Crocker common shares by Midland Bank PLC of London.
The suit, filed in Delaware Chancery Court, alleges that Midland knew more about Crocker's deteriorating financial position than the investing public for a long time. It also alleges that Midland worked to drive down the price of the bank's stock so it could be acquired cheaply.
San Francisco-based Crocker is incorporated in Delaware.
Midland, which already owns 57% of Crocker's equity, earlier this month of Crocker's equity, earlier this month offered to exchange Crocker common shares for a new issue of Crocker adjustable-rate preferred stock with a face value of $25 a share.
To study the offer, Crocker has established a panel of five directors who are not connected with Midland. some analysts, who are optimistic about Crocker's future company profits, have said the bank would be doing its stockholders a disservice to accept Midland's terms. Until Crocker's board takes a position on the Midland offer, comment on the suit would be inappropriate, the bank said.
The suit was brought by New York City residents William A. Cass, holder 0f 2,000 Crocker common shares, and Stuart D. Wechsler, owner of 100 shares. Their suit seeks injunctive relief and disclosure to all minority shareholders of the damage that common shareholders have sustained as a result of Crocker's deteriorating financial position.
At the end of June, Crocker posted a second-quarter net profit of $6.1 million following a combined six-month loss of $178 million.
In a separate but related action, a class-action suit has been filed on behalf of convertible preferred shareholders. …