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By PAUL SIMS
On Wednesday, Cadence Bank officials released information toward the possible settlement of a lawsuit over the bankâ€™s proposed sale.
In a filing with the Securities and Exchange Commission Thursday, bank officials said theyâ€™ve entered into a memorandum of understanding Wednesday with RSD Capital, the lead plaintiff in a class-action suit filed in New York in October.
The suit alleges certain Cadence officials entered into the agreement to sell the bank for personal gain. Bank officials have said the lawsuit lacks merit.
The suit was filed on behalf of RSD Capital and all other Cadence shareholders except for those named as defendants in the suit. These include Cadenceâ€™s Board of Directors and others affiliated with them.
RSD Capital â€“ based in New York â€“ has owned Cadence common stock on a continuing basis since on or around Oct. 15, 2007.
In the filing, Cadence officials said they directed their financial advisor, Keefe, Bruyette, Woods Inc. to contact private investors with experience investing â€śin financial institutions and with the resources and ability to consummate a transaction on the time frame contemplated by Cadence.â€ť
KBW officials made contact with 12 potential private investors in July and early August. They also reached out to five financial institutions which may have had an interest in the bank, according to the filing. All five were interested in acquiring the bank or signing a non-disclosure deal.
The filing included a comparative analysis of recent transactions and a discounted cash-flow analysis, which assumes a capital raise and shows the bank will climb out of negative territory in earnings-as-reported and asset growth over the next several years.
The projection shows Cadence going from an earnings loss of about $4.37 million and a negative capital growth of 16.5 percent this year to around $16.02 million to the positive in 2015, with a 5 percent capital growth rate from 2012 through 2015.
â€śThe MOU contemplates that the parties will enter into a stipulation of settlement. The stipulation of settlement will be subject to customary conditions, including Court approval following notice to Cadenceâ€™s shareholders,â€ť the filing reads.
At issue in the suit is the proposal to sell the publicly-traded financial institution to Community Bancorp, a Texas-based investment firm established to acquire, stabilize and operate failed or distressed U.S. banks, officials have said. Most of the companyâ€™s investors are private and public pension funds, endowments and foundations.
CBC officials intend to take the bank private pending regulatory and shareholder approval of the deal, which would allow for the cash purchase of Cadence common stock at $2.50 a share. CBC also proposes to pay $38 million for the U.S. Treasuryâ€™s ownership of preferred stock, which it purchased as part of the Troubled Asset Relief Program for $44 million.
On Thursday, Cadence shareholders will cast votes as to whether to back the sale to CBC.
In October, Cadence officials chose to pursue the CBC deal and break an agreement to merge with Jackson-based Trustmark. When contacted Thursday, Cadence officials declined comment, citing the pending legal matter. Cadence shares closed trading Thursday up 1 cent to $2.47.