Edwin F. Hale Sr. claimed victory yesterday in his proxy fight to gain control of Baltimore Bancorp, but management refused to concede defeat.
Who actually won won't be known until the middle of next week, when the ballots will be counted.
"There are two big switches that went our way," said Dennis Gingold, an attorney representing Mr. Hale, a 44-year-old trucking and shipping entrepreneur who began the proxy fight in April with the goal of unseating former Chairman Harry L. Robinson, who was indeed ousted by the current board in June.
Mr. Gingold said that three institutional investors that had supported management in Baltimore Bancorp's first round of proxy voting in May threw their support to a Hale-backed bid to expand the company's board of directors in the new vote. He declined to say which institutions switched but said that they hold a total of about 300,000 shares.
Jerome P. Baroch, executive vice president of the Bank of Baltimore's parent company, said that the company didn't know of "any big switches, not anything of any significance" in favor of Mr. Hale's group.
"It's going to be close," said Mr. Baroch, who stopped short of saying management would defeat the motion to expand the board. He said that because ballots in favor of the dissidents' resolution were sent directly to Mr. Hale, the bank doesn't know exactly how much support his group has.
"It's impossible [to predict] because of not seeing large parts of the vote," Mr. Baroch said. "If we don't get a gold card, we don't know if [a shareholder] sent in a green card." Management's ballots, advising a vote against expanding the board, were printed on gold-colored paper. Mr. Hale's ballots were printed on green paper. Each shareholder received a ballot from each side.
The company closed its shareholder vote yesterday on the proposal to expand the board of directors to 28 seats from 18. If the proposal passes, the 10 new seats will be filled by candidates loyal to Mr. Hale, giving the insurgents a majority.
The vote was the second vote on the resolution this year.
In the round of voting in May, Mr. Hale and his backers won six seats on the existing board, and their motion to expand the board appeared to pass by 970,000 votes. But management went to court, insisting that more than 1 million votes that were counted as abstentions should have been counted as votes against expanding the board.
U.S. District Judge J. Frederick Motz ruled that the disputed ballots were so vaguely worded that there was no way to know how the owners of the shares wanted to vote. He ordered a new vote on the issue.
The election of the six new directors to existing board seats wasn't affected, and Mr. Hale and five supporters took over their seats in June.
The week after Judge Motz's ruling, the board deposed Mr. Robinson and chose Robert F. Comstock to be chairman and chief executive.
Management entered the second campaign knowing that almost everything had to go its way in order to defeat the resolution to expand the board. Both sides said that management was likely to pick up the vote of A. James Clark, a construction company owner who owns more than 212,000 shares and who had contended he voted for Mr. Hale accidentally in the first election.
In a proxy contest, each share counts for one vote, and Baltimore Bancorp has just under 12.8 million shares outstanding.
In order to win, management had to pick up almost all of the disputed votes that were counted as abstentions in the last vote and keep the support of the minority of institutional shareholders who supported management in the first round of voting. Mr. Hale's group said that management fell short of that goal.