Magazine article American Banker

N.Y. Thrift Is Pressured to Weigh Hostile Bid

Magazine article American Banker

N.Y. Thrift Is Pressured to Weigh Hostile Bid

Article excerpt

NEW YORK - Republic New York Corp. gained some support Monday for its unusual hostile takeover bid for Green Point Savings Bank.

Several depositors at the mutual institution, based in the New York borough of Queens, filed a class-action lawsuit seeking to force Green Point's trustees to let them vote next month on Republic's offer.

Management Power at Issue

The acquisition proposal, which became public last weekend, highlights controversial issues of depositors' rights and management's power at mutual savings institutions.

Republic asserts it can legally make a $100 million "special interest payment" to depositors of Green Point as part of a proposed merger-conversion transaction.

Green Point contends the offer is illegal in New York State and essentially a bribe. Its management plans to proceed with a December initial public offering of 53.7 million shares of stock.

Each side charged that windfall profits would accrue to the other if their rival mutual-to-stock conversion routes were pursued.

Green Point chairman Thomas S. Johnson, formerly president of Manufacturers Hanover Corp. and Chemical Banking Corp., asserted a merger-conversion with Republic would be "detrimental to our depositors' financial interests."

$700 Milhon Stock Offering

The lawsuit was filed in New York State Supreme Court, Queens County, by the law firm of Milberg, Weiss, Bershad, Hynes and Lerach.

Besides the interest payment, Republic in its proposal would raise $700 million from a stock offering and invest the proceeds in Green Point.

Lawyers and Wall Street banking analysts said Republic, with no way of officially approaching Green Point's depositors, is relying on the "public route" to force management to address its offer.

"It's basically a trial balloon," said a lawyer. "They're hoping to stir up things, raise the issue of |fiduciary duty,' and put pressure on the trustees" of the thrift. …

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