Board of Directors Continues its Refusal to Consider a Superior Offer from Blue Hill Advisors, Potentially Breaching their Fiduciary Duty
WESTPORT, Conn., Oct. 24, 2024 /PRNewswire/ — Yakira Capital Management, an investment manager based in Westport, CT, has been compelled to issue an additional public response regarding Territorial Bancorp’s (NASDAQ: TBNK) Board of Directors’ rejection to consider a superior acquisition offer from the Blue Hill Advisors consortium, in favor of a merger with Hope Bancorp “Hope” (NASDAQ: HOPE). With 111,247 shares (approximately 1.23%), Yakira is one of the largest shareholders of Territorial, and has urged the Board of Directors to at least examine an acquisition offer by Blue Hill.
Territorial shareholders should not have to fight for the Board to declare a proposal with a 25% premium to be “reasonably likely to be superior” to the Hope transaction. The Board has expressed concerns about the Blue Hill offer. We urge the Board, acting as fiduciaries to shareholders, to deem the Blue Hill offer as “likely to lead to a superior offer” and immediately open negotiations with the consortium given it is in the best interest of all shareholders.
Below are key points addressing each of the arguments that the Board of Directors has made, as to why they refuse to open negotiations with Blue Hill.
“Hope deal is ~25% premium to Territorial’s closing stock price just prior to merger announcement” – The Blue Hill offer was a 25% premium to the Hope deal, how is that not a superior proposal?
“A Blue Hill transaction would be taxable; the Hope Bancorp merger is not.” – We find this argument disingenuous. Under current management the 5-year average on the TBNK stock is $17.75, leaving most shareholders with losses, not gains. In addition, since the stock price collapsed on 4/30/23, it has averaged $9.46 with a low of around $7. Even if someone perfectly timed their trading, the excess premium from the Blue Hill deal would more than compensate for any taxes paid.
“1,000%+ increase to Territorial’s standalone dividend, increasing from $0.01 per share to $0.11 per share” – This new dividend is nearly 40% less than the dividend shareholders received prior to management’s slashing of the dividend in the 3rd quarter of 2023, just 8 months prior to the Hope deal. The adjusted dividend is also less than a 4% yield. Shareholders would be much better off taking the additional 25% in consideration and sticking it in a risk-free Treasury yielding over 4%.
“If Blue Hill is unable to complete a 100% tender, the remaining Territorial shareholders would be left with an illiquid, stub minority investment in a controlled company and with limited rights.” – The Blue Hill Proposal clearly states they will tender for 100% of the shares.
“Territorial shareholders will not immediately receive any payment for their shares while any transaction with Blue Hill is sitting in regulatory limbo.” – This is customary for any transaction. In fact, prior to the Blue Hill proposal, TBNK shares averaged a 4.75% discount to the implied price of the Hope deal. A similar discount to the $12.50 price would still equate to a price over $11.90.
“No confidence that its proposed transaction is reasonably likely to close.” – Without engaging with Blue Hill, how does the Board expect them to provide the necessary information to alleviate the stated concerns? It is unreasonable to expect them to provide the necessary information in a public forum.
“In fact, the Blue Hill indication of interest presents so much risk and uncertainty, that if it were pursued, Territorial’s stock – and the value of your investment – could be worth substantially less than it does today.” – As we cited several times, we believe the tender offer of $12.50 could reasonably lead to a superior offer. Why not just announce that and open negotiations with Blue Hill to conduct proper due diligence? Worst case scenario is that Blue Hill can’t resolve the issues, and you proceed with the Hope deal. Per the DMA, Hope just can’t walk away if you open discussions with Blue Hill.
Why does the CEO & Chairman of the Board, Allan Kitagawa, the man who oversaw a total loss of share value of nearly 47%i over the 10-year period prior to the announcement of the Hope transaction, continually refuse to open negotiations that could see public shareholders benefit from a far superior cash offer? Despite Mr. Kitagawa’s apparent fear campaign, per the Merger Agreement, Territorial is well within its rights to open negotiations with Blue Hill and Hope would be unable to terminate the agreement.
We believe management is breaching their fiduciary duty by not declaring the Blue Hill offer as “potentially likely to lead to a superior proposal”. As a potentially superior offer, the Board has an obligation to consider it. We reiterate our intention to vote against the Hope deal.
About Yakira Capital ManagementYakira Capital Management is an SEC registered investment advisor based in Westport, CT with over $470 million in assets under management. Yakira is an event-driven alternative asset manager for institutional and private clients globally, whose flagship fund was founded in 1997.
Cautionary Statement Regarding Forward-Looking StatementsThis press release does not constitute an offer to sell or solicitation of an offer to buy any of the securities described herein in any state to any person. The information herein contains “forward-looking statements”. Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “potential,” “targets,” “forecasts,” “seeks,” “could,” “should” or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Forward-looking statements are subject to various risks and uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct or that any of the objectives, plans or goals stated herein will ultimately be undertaken or achieved. If one or more of such risks or uncertainties materialize, or if Yakira Capital Management, Inc’s (“Yakira”) underlying assumptions prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Yakira that the future plans, estimates or expectations contemplated will ever be achieved.
Media ContactsRyan Walker
R.J. Walker & Co.
[email protected]
Duane Biasi
Director of Trading
Yakira Capital Management
(203) 349-8191
i Based off the TRA function on Bloomberg, including reinvested dividends from 04/29/14-04/29/24
SOURCE Yakira Capital Management
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