The battle of Baltimore Bancorp got even sharper yesterday as six newly elected directors led by Edwin F. Hale Sr. demanded an early meeting of the company's board of directors and access to confidential company information.
An attorney for incumbent management said that the company would refuse to convene a board meeting, as Mr. Hale demanded in a letter to company Chairman Harry L. Robinson that was released yesterday. Mr. Hale suggested that the meeting be held today.
Mr. Hale has been leading a challenge by dissident stockholders to take control of the company, the parent of the Bank of Baltimore. He and five supporters were elected to seats on the company's 18-member board of directors in voting whose results were confirmed this week.
The insurgents are also trying to expand the company's board of directors to 28 and fill the 10 new seats, which would give them control of the company. They also appear to have won a majority in the shareholders' vote on that issue, but the two sides are battling in federal court over a company bylaw that management says requires an 80 percent shareholder vote to expand the board.
Mr. Hale is seeking only to have the six elected directors seated on the board for now, pending the outcome of litigation.
"The bylaws of Baltimore Bancorp require that a board of directors meeting shall be held immediately following the stockholders meeting at which directors are elected," Mr. Hale's letter said.
Mr. Hale also wants information from the company, including a list of all of its potential problem loans, briefings on all transactions involving the company "in which the dollar amount involved exceeds $100,000," transactions with officers and directors of the company, and the company's 1991 business plan.
The new directors "are responsible for the operation of the institution," said Dennis Gingold, an attorney for Mr. Hale, and need the information to do their jobs.
Benjamin Stapleton III, an attorney for management, responded that it wouldn't make any sense to have a board meeting until all the issues that decide who belongs on the board are settled.
"All we're trying to do is preserve the status quo" until the litigation is wrapped up, Mr. Stapleton said. "We're not taking any action to disadvantage Hale."
The attorney added that there are no issues facing the bank that demand a board of directors' meeting. Day-to-day operation of the company is being handled by management, he said.
Mr. Gingold said that the insurgents are trying to arrange for a telephone conference with U.S. District Judge J. Frederick Motz to get an order forcing management to seat the six Hale-backed directors. The judge is in California for a conference.
Mr. Stapleton said that the company would agree to let the newly elected directors take their seats if Judge Motz issued such an order.
The company has a lawsuit pending, however, that alleges that the Hale slate made false and misleading statements to shareholders during the election campaign for the board of directors, leading up to the company's May 22 shareholders' meeting. If the company wins that lawsuit, the six directors' election could conceivably be invalidated.
Baltimore Bancorp chronology
April 1990: First Maryland Bancorp makes a "friendly proposal" to acquire Baltimore Bancorp for $17 a share (it was then trading for about $10). Management rejects proposal, saying offer is too low and company is not for sale.
Fall 1990: Baltimore Bancorp stock falls below $4 a share.
April 1991: Dissident shareholders led by Baltimore Blast owner Edwin F. Hale Sr. say they will launch a proxy challenge for control of the company.
May 10: Baltimore Bancorp appeals to Federal Reserve, which regulates banks, to halt Mr. Hale's proxy solicitation, claiming Mr. Hale needed to get clearance from Fed to take control of the bank but did not.
May 15: T. Rowe Price Associates Inc., the company's biggest shareholder, casts its vote for the Hale slate. T. Rowe owns almost 9 percent of Baltimore Bancorp stock. Mr. Hale claims he has "momentum to win."
May 19: Dissidents ask Securities and Exchange Commission to throw out all of management's votes, claiming they were based on false and misleading information management released about the Hale slate.
May 21: Federal Reserve denies company's May 10 appeal, saying company's reading of federal banking law is wrong. SEC forces company to hold open polls, scheduled to close at May 22 annual meeting, until May 28 so shareholders can learn of the Fed's decision.
May 22: Shareholders' meeting. Both sides claim enough votes to win.
June 4: Preliminary vote totals show dissidents win 6 board seats. Two sides prepare for court fight over whether it takes a majority vote or an 80 percent vote to expand company's board, which would give control to Hale slate.
June 11: Two sides argue the issue before U.S. District Judge J. Frederick Motz, who reserves decision. Revised vote count shows that Hale slate is still ahead; management claims counting errors.