Six days before all ballots are due, dissidents trying to take over the board of Baltimore Bancorp are claiming victory -- a claim that was immediately challenged by the bank's management.
Shortly after the 2 1/2 -hour annual meeting yesterday, Edwin F. Hale Sr., leader of the dissident group, issued a press release saying a preliminary tally of results indicates his slate of candidates got a majority of the shareholder votes and was "duly elected."
Hale, a Baltimore truck and shipping executive and owner of the Baltimore Blast soccer team, heads a 16-person group trying to seize control of Baltimore Bancorp, the parent of Bank of Baltimore. Hale would become chairman of the bank holding company if he is successful.
Harry L. Robinson, chairman and chief executive officer of Baltimore Bancorp, issued a statement late yesterday attacking Hale's claim. "We believe it is a violation of [the] Securities and Exchange Commission's rules for anyone to predict the outcome of this election before the polls close on Tuesday afternoon. We are therefore constrained from making a victorious statement and we believe it is a blatant disregard for the rights of shareholders who either haven't voted yet or who may change their vote to do so," he said.
A preliminary count by the bank's management indicates that it has a majority of the votes, according to Jerome Baroch, senior executive vice president for Baltimore Bancorp. However, he cautioned that it is difficult to tell because of the ability of shareholders to revoke ballots. "At this point, nobody knows," Baroch said.
The dissidents' claim of victory also depends on their being victorious in court on the issues of what percentage of the shareholders' vote is necessary to enlarge the board and whether the company can extend the voting period.
Despite the victory announcement, Hale's group would not disclose how many votes it had collected in proxies before the meeting. "Those numbers will be filed with the courts," said Daniel H. Burch, executive vice president of Dewe Rogerson, a New York solicitation firm representing the dissidents. After being pressed, however, Burch said the dissidents have well over 5 million of the 12.8 million outstanding shares.
The dissidents estimate that 9 million to 10 million votes were cast before and during the meeting.
In a proxy fight, a group tries to persuade shareholders to support its slate of candidates by sending in their votes before the annual meeting or casting them at the meeting. The winner needs a majority of the votes cast.
The Hale group's effort is dependent on getting solid support from the 40 institutional investors who control about 35 percent of Baltimore Bancorp's 12.8 million outstanding shares. Burch claimed that he did not know of one institutional investor voting for management.
Yesterday's annual meeting was preceded by Hale holding a press conference to denounce Baltimore Bancorp's decision on Tuesday to extend the voting until noon next Tuesday.
Under the arrangement, yesterday's annual meeting was adjourned until 11 a.m. Tuesday. After the meeting reconvenes at the bank's headquarters at 120 E. Baltimore St., it will remain in session for voting until noon, bank officials said.
Hale said he objects to the postponement because it gives management more time to persuade individual shareholders to vote for current directors. "We think they are afraid that they are going to lose," Hale told reporters. "We think we have the votes to win."
In a press release after the meeting, the Hale group said it would be mounting a legal challenge to the extension of voting.
During the annual meeting, lawyers for Baltimore Bancorp said the extension grew out of a request by the SEC because of possible stockholder confusion. "This was done solely at the request of the SEC," said Benjamin Stapleton, an attorney for Sullivan & Cromwell of New York.
The dissidents are also challenging a provision in Baltimore Bancorp's bylaws that would require an 80 percent vote of shareholders to change the size of the board. Unless dissidents are successful in overturning that provision, it is unlikely they will be able to get a majority on the board.
Only six of the board's 18 members are up for election. To gain a majority of the board, the Hale group is trying to increase the board by 10 positions and then elect 16 new members.
In his speech to the annual meeting, Robinson emphasized that the bank was able to remain safe, sound and profitable during 1990 despite the problems of major banks in the area. The bank has been profitable for the last 40 years. He particularly pointed to an increase of $80 million in deposits during September, October and November of last year as other area banks were experiencing problems. "That was the largest gain we have ever had," he said.