Insurgents seeking to gain control of Baltimore Bancorp said yesterday that they have won the support of T. Rowe Price Associates Inc., Baltimore Bancorp's biggest shareholder, in a bid to elect 16 new directors to the company's board and give the challengers a majority.
"This is a very significant endorsement," said Edwin F. Hale Sr., owner of Port East Transfer Inc. in Baltimore and the leader of the dissident shareholders, who have vowed to replace Baltimore Bancorp Chairman Harry L. Robinson if they gain control of the board.
"They have the largest block [of Baltimore Bancorp stock] and it willprobably be a catalyst for other people to vote our way as well," Mr. Hale said. "It gives us the momentum to win."
Management at Baltimore Bancorp, the parent company of the DTC Bank of Baltimore, said it won't concede T. Rowe Price's vote and would try to persuade change. "We continue to talk with all the institutional investors," said Jerome Baroch, executive vice president of Baltimore Bancorp. "We're not giving up on anybody."
T. Rowe Price spokesman Steven E. Norwitz confirmed that the company had voted its shares, but would not say how it voted. However, the Hale camp provided a facsimile copy of the T. Rowe Price proxy to The
Sun, confirming T. Rowe Price's vote.
"We're free to say we've gotten their proxy, but they have to walk a fine line," said Daniel H. Burch, executive vice president of Dewe Rogerson, a New York proxy solicitation firm retained by Mr. Hale.
T. Rowe Price has been careful to avoid the appearance that it is leading the proxy effort in any way. Under securities law, Price's ballot could be invalidated if it is shown to have been a leader of the proxy effort without disclosing that fact. Both Mr. Hale and Price have said they are not working in concert.
Price's mutual funds and individual-investor clients hold about 8.7 percent of Baltimore Bancorp's stock, Mr. Norwitz said. Mr. Norwitz said the company has the authority to vote about 870,000 Baltimore Bancorp shares, or 6.8 percent of the total, and can advise the owners of the other 1.9 percent on how they should vote.
Shareholders can revoke their proxies, or change their votes, any time up until the company's annual shareholders' meeting Wednesday. Any shares whose holders don't vote, or don't give either side the right to vote their shares by proxy, won't be counted.
Mr. Baroch conceded he was surprised by T. Rowe Price's action, even though the company has had sometimes stormy relations with its biggest shareholder in the past year since management refused to consider a $17-a-share takeover offer from First Maryland Bancorp, parent of the First National Bank of Maryland.
"I'd have to say it's a surprise," Mr. Baroch said. "I can't imagine them voting for that group."
Mr. Hale is campaigning hard among institutional shareholders, who own 35 percent of Baltimore Bancorp's stock. Among the other institutions that hold significant stakes in the company are First Maryland and Legg Mason Inc.
First Maryland owns 4.9 percent of Baltimore Bancorp. First Maryland hasn't yet said whether it will support the six Baltimore Bancorp directors who are running for re-election, or vote with Mr. Hale to expand the board to 28 members from 18, vote out the six incumbents who are up for re-election this year and hand control of the company to the insurgents.
Legg Mason holds 540,000 shares, or about 4.2 percent of the total. Like most of T. Rowe Price's, the shares belong to shareholders of mutual funds managed by Legg Mason, Legg Mason spokeswoman Geraldine Daly said. She said the company doesn't comment on proxy matters.
Mr. Burch said the insurgents believe Legg Mason will decide which side to vote for as soon as today. "We're hopeful of getting their vote," he said. Mr. Burch and Mr. Hale said they don't expect First Maryland to make a commitment until its officials actually cast their vote.
Mr. Baroch said Baltimore Bancorp's management sees its strongest base among the 65 percent of the shares that are owned by individual investors, most of whom live in the Baltimore-Washington area. Officers and directors of the company own 4.7 percent as a group. But he said management has also been meeting and talking with institutional shareholders to seek their support.
Neither side would say how many proxies it has received, citing federal securities laws.
The issue of how many votes it will take to oust Mr. Robinson's directors went to federal court in Baltimore yesterday, as Mr. Hale's lawyers asked U.S. District Judge J. Frederick Motz for an order to stop Baltimore Bancorp from maintaining that an 80 percent vote of those shareholders voting will be needed to expand the board to 28 members.
William Bradford Reynolds, a Washington attorney for the Hale slate, said only 50 percent is needed because there is nothing in the company's charter requiring an 80 percent vote. Baltimore Bancorp says it has such a provision in its bylaws, but Mr. Reynolds contends that Maryland law demands that it be in the charter.