ANNUAL MEETINGS : Crocker National Holders OK Merger Into Midland
The shareholders of Crocker National Corp. approved a merger with London-based Midland Bank, which currently holds a 57% ownership interest in the firm, the parent of Crocker National Bank.
The results of the voting were announced at the Crocker annual meeting in San Francisco. The merger, originally proposed last summer, was approved by 98% of the Crocker shareholders who voted. Midland agreed to vote its shares in the same proportion as those holding the outstanding 43% of Crocker shares.
The vote clears the way for final approval of the $224-million stock-swap deal by Midland shareholders, who are expected to ratify the plan Thursday.
The only remaining obstacle then would be the resolution of a number of shareholder suits challenging the merger and seeking restitution for the declining value of their shares, which plummeted in price following the announcement of huge losses by the bank. A settlement plan for those suits is now before a court in Delaware, where Crocker is incorporated.
Under the merger agreement, each share of Crocker common stock will be exchanged for 0.54 share of a new issue of Crocker preferred with a target trading price of $27 a share. Dividends will be set at a variable rate based on the interest rate paid on several U.S. Treasury securities.
The dividend rate in mid-April would have been 12.5%, Crocker officials said, but probably would be lower today because of falling interest rates.
Crocker lost $324 million last year and $10 million in 1983 because of bad loans in real estate, agriculture and Latin America. The bank showed a modest profit of $9 million in the first quarter of this year.
“The company has indeed sustained substantial shocks over the past 12 to 15 months,” Crocker Chairman Frank V. Cahouet said in response to a shareholder question. But he also said that the company had made progress in strengthening its asset base by charging off and renegotiating hundreds of millions of dollars worth of non-performing loans.
Crocker, the nation’s 16th-largest bank based on assets, has the highest ratio of bad loans to total loans of the country’s 25 biggest banks.
Cahouet also said that the bank would continue cost-cutting measures such as the layoffs of 750 employees announced in April.
Midland’s takeover of the troubled San Francisco bank will give Crocker access to needed capital and expertise in dealing with its shaky foreign loan portfolio. Once the merger is completed, Crocker will place renewed emphasis on serving the California market while turning over multinational lending activities to Midland, Cahouet said. Crocker’s operations will be streamlined by combining administrative, legal and technical staffs with Midland’s.
