Yakira Capital Urges Territorial Bancorp To Reconsider Acquisition Offer From Blue Hill Advisors

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Oct 10, 2024, 08:30 ET

Territorial has refused preliminary negotiations with Blue Hill despite a financially superior offer - potentially breaching the Board's fiduciary duty

WESTPORT, Conn., Oct. 10, 2024 /PRNewswire/ -- Yakira Capital Management, an investment manager based in Westport, CT, has issued a letter to Territorial Bancorp's Board of Directors expressing significant concern on the pending merger with Hope Bancorp. With 111,247 shares (approximately 1.23%), Yakira is one of the largest shareholders of Territorial, and has urged the Board of Directors to consider an acquisition offer by Blue Hill Advisors. Thus far, the Board has refused to even open discussions with Blue Hill and has not acted in good faith by publicly disparaging the Blue Hill proposal. By denying any and all negotiations from even taking place, the Board is not acting in the best financial interest of its shareholders.

Below is an abridged version of the correspondence sent to Territorial's Board of Directors between October 3^rd and 10^th, 2024.

We are very concerned over the Board of Directors' refusal to engage in discussions with the investor consortium led by Blue Hill Advisors, after their recent proposal to acquire up to 100% of the shares of Territorial for $12.50, a valuation more than 25% higher than the Hope deal.
The Board announced on October 4^th that a special meeting would be delayed so that management had ample time to continue discussions with shareholders. However, the next business day, on the morning of October 7, 2024, they issued a press release disparaging the Blue Hill offer, leaving insufficient time to speak with shareholders, including Yakira.
Since the Blue Hill proposal was made public, we have implored Territorial's management to open negotiations with Blue Hill. The aforementioned press release clearly shows that rather than looking to have an open dialogue with shareholders regarding their concerns over the current sale process, the Territorial management team continues its refusal to engage with Blue Hill, regardless of the wishes of its shareholders.
Yakira Capital Management intends to vote against the merger as it currently stands. While we credit the Board for doing a good job of extracting value in the original deal with Hope, we believe the Board is now ignoring their fiduciary duty by refusing to engage with Blue Hill.
We believe the Blue Hill proposal is financially superior to the current offer. Blue Hill has stated to have a fully financed offer, while needing limited regulatory approvals due to the nature of the tender offer. As of late, bank mergers are regularly taking 12 months or longer to obtain the necessary approvals from the regulatory bodies. It is fully conceivable that if the Board decided the Blue Hill proposal was superior, the consortium would be able to obtain the necessary approvals and close the tender well before the Hope deal received the requisite approvals.
While it is understandable for the Board to be cautious regarding regulatory approvals, per the Blue Hill release, the investor group is well known to Territorial's regulators and is headlined by Mr. Allan Landon who was the former President and CEO of the Bank of Hawaii, the 2^nd largest publicly traded bank based in Hawaii. It is entirely credible the investor group would obtain the regulatory approvals. In addition, the current deal with Hope has not received the required regulatory approvals and it is not guaranteed they will obtain them.
We are not alone in our stance, Institutional Shareholder Services (ISS) recently came out against the merger vote, believing that the Hope merger "does not appear to maximize value for shareholders" and "the competing offer from Blue Hill appears sufficiently credible to mitigate the downside risk of rejecting the proposed merger".

We continue to question why the Board is so vehemently against an offer that provides approximately 25% more value for shareholders. Simply declaring an offer potentially superior does not mean you need to sign a DMA. We urge the Board of Territorial to fulfill their fiduciary duties and engage in discussions with Blue Hill. We are perplexed at the Board's unwillingness to open a dialogue with Blue Hill and conduct their own due diligence to see if Blue Hill can address your concerns.

About Yakira Capital Management
Yakira Capital Management is an SEC registered investment advisor based in Westport, CT with over $470 million in assets under management. Yakira is an event-driven alternative asset manager for institutional and private clients globally, whose flagship fund was founded in 1997.

Cautionary Statement Regarding Forward-Looking Statements
This press release does not constitute an offer to sell or solicitation of an offer to buy any of the securities described herein in any state to any person. The information herein contains "forward-looking statements". Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "potential," "targets," "forecasts," "seeks," "could," "should" or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Forward-looking statements are subject to various risks and uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct or that any of the objectives, plans or goals stated herein will ultimately be undertaken or achieved. If one or more of such risks or uncertainties materialize, or if Yakira Capital Management, Inc's ("Yakira") underlying assumptions prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Yakira that the future plans, estimates or expectations contemplated will ever be achieved.

Media Contact
Duane Biasi
Director of Trading
Yakira Capital Management
(203) 349-8191
[email protected]

SOURCE Yakira Capital Management