The Republic First Bank saga took another turn Jan. 24, when a judge ordered a delay of the beleaguered bank’s annual shareholder meeting, which was finally scheduled to take place Jan. 26.
Philadelphia Court of Common Pleas Judge Ramy Djerassi issued an order delaying the meeting until May 31 while he works through an injunction that was filed in November by an activist investor group led by George Norcross, Philip Norcross and Greg Braca – known as the Norcross Braca Group – that challenged the reduction of the bank’s board, among other contentions.
That injunction was filed amid continued drama between the Norcross Braca Group and the current board, headed by Harry Madonna, the bank’s founder and its recent interim CEO. (See the bottom of this story for an index of NJBIZ’s complete coverage of this ongoing story.)
Madonna was once aligned with the activist investors during the initial phases of the proxy fight against now-ousted CEO Vernon Hill. Last month, Madonna stepped down from the interim chief executive officer role with Thomas Geisel taking his place as CEO and president and Michael Harrington coming on board as CFO.
Since that brief détente against their mutual adversary Hill, things have deteriorated between the board and the activist investor group, with disputes emerging over a range of issues, from board seats to concerns about operations and management to shareholder value and board member spending and perks.
The bank has not held a shareholder meeting since April 27, 2021. The re-scheduled event, which was first delayed because of an audit investigation, loomed over an unresolved situation as things have shaken out in the wake of Hill’s departure.
The Norcross Braca Group stressed that even without the ruling, the annual meeting could not have occurred because Republic First failed to file a proxy statement with the U.S. Securities and Exchange Commission (SEC) or to provide 10 days’ notice to shareholders of the time and place of the meeting, as required by the company’s bylaws and Philadelphia laws.
They say that it is another example of the board’s lack of transparency with shareholders.
“We are thankful for Judge Djerassi’s order that the leadership of Republic First cannot move forward with this plan to hold the company’s 2022 annual meeting tomorrow,” Braca said Jan. 25. “The company’s own delay in filing its definitive proxy and providing notice of the meeting requires it to reopen the nomination window and allow shareholders to nominate board members to replace the company’s current failed leadership when the meeting is rescheduled. We look forward to nominating highly qualified candidates who can steer the company and its operations in the right direction, restore lost shareholder value and protect the company and its employees, customers and communities.”
Djerassi set an April hearing for the injunction, which argues that Republic First is rigging the upcoming shareholder election by illegally reducing the size of its board from eight to six, which the Norcross Braca Group says is part of an ongoing effort to prevent accountability for poor performance and improper-related party transactions.
“It is crystal clear to any one paying attention that the leadership of Harry Madonna, Andrew Cohen, Lisa Jacobs, and Harris Wildstein has railed Republic First in almost every regard,” said Braca. “From its worst in peer group performance of the bank in just about every measure that we believe have cost shareholders tens of millions of dollars to awarding insiders with golden parachutes and contracts to repeatedly failing to meet its legal requirements, it’s time for a change.”
The group said that the biggest threat to the bank’s future is the decision to lock up a significant portion of its investment portfolio in long-term investments just prior to the recent interest rate hikes, which it believes has caused Republic First’s equity to spiral to levels where it may be considered insufficiently capitalized, as well as the ongoing threat of delisting by the Nasdaq Stock Market due to the failure to file required reports.
The activist investor group said it plans to communicate directly with the board and shareholders in the coming weeks about needed changes at Republic First, issues with the current board and leadership, the ongoing threats to the bank’s future, and its offer to inject $100 million of capital to improve the bank’s operations.
That $100 million offer was made earlier this month in exchange for a just-under 50% stake and two board seats.
“An offer which rather than being embraced by the company has been largely ignored or met with unreasonable requests to enter into standstills to have even initial discussions,” the Norcross Braca Group said in its statement.
“It is extremely hypocritical for the Norcross Braca Group to bemoan the delay of the company’s annual meeting when that group itself sought an emergency court order to prevent the meeting from proceeding on January 26th as planned,” Republic First told NJBIZ in a statement. “We will vigorously defend the company against the group’s meritless public accusations and ensure that the best interests of all shareholders are protected.”
“With a new leadership team and a board that was refreshed with valuable input from significant shareholders – including three new directors added within the past seven months – we are focused on executing our strategy to better serve customers, drive profitability and create increased value,” Republic First added.
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