The saga of Republic First Bank entered a new phase when the institution’s parent company announced late last week that it is initiating a strategic review “in light of inquiries by multiple parties expressing interest in one or more potential strategic transactions with the company.”
The bank’s board of directors established a Strategic Review Committee to evaluate those inquiries as well as a range of potential transactions and alternative strategies. That process will include the independent advisement of Keefe, Bruyette & Woods Inc., a leading investment bank specializing in the financial sector.
Sales rumors have been rampant throughout a months-long proxy battle at Republic First, extensively chronicled by NJBIZ, that resulted in the ouster of former CEO and Chairman Vernon Hill and the naming of Republic First Bank founder Harry Madonna to take up those roles as interim leader.
ICYMI: The battle for Republic First Bank
Click on any link below for the most recent developments:
- Madonna named interim chair at Republic Bank
- Appeals court overturns custodian appointment
- Judge orders special board election for July
- Custodian appointed in Republic First Bank saga
- Federal judge shoots down Hill’s injunction bid
- Republic Bank CEO Hill files federal lawsuit to stop ouster
- Norcross withdraws Republic Bank lawsuit, Hill moves to block ouster
- Hill out as Republic Bank chairman, Madonna named interim
- Death of Republic Bank director could reshape proxy fight
- Judge prods Republic First Bank board for response in proxy fight
- Norcross group backs Driver slate in Republic Bank battle
- Business giants square off in battle for Republic First Bancorp
The bank says that the Strategic Review Committee will seek to enter into non-disclosure agreements with interested parties in potential transactions involving the company. “There can be no assurance that the strategic review will result in one or more transactions or other strategic change or outcome,” the company said in a statement.
Meanwhile, the activist investor group at the center of that proxy fight – the Norcross Braca Group, which holds nearly 9.9% of the company’s stock – wrote a letter to the board of directors in response to the announcement.
“We applaud the effort and appreciate the board finally moving forward in a more definitive direction after months of needless delay as all of the shareholders have incurred significant damage as a result of the stock price declining since the departure of the prior chairman; a trend that continued until the recent announcement,” the group said in a statement.
The Norcross Braca contingent noted that over the last eight months it has voiced concerns to the board on a number of items, including insider transactions, lack of transparency and leadership, strategic investment errors and dysfunctional management.
“That said, much work still remains for the company and its board, including the need to regain compliance with NASDAQ listing requirements by completing and filing long overdue financial reports,” the group wrote.
The Norcross Braca Group also called attention to recent actions taken by company management.
“Specifically, more than a month after action was taken, the company recently announced that it granted the interim chief executive officer a financial incentive and golden parachute package that would result in him receiving millions of dollars at the expense of the shareholders if certain transactions, like a sale of the company, were to occur,” said the Norcross Braca Group. “Just a few days later, the company announced the creation of the Strategic Review Committee.
“We are deeply concerned the market may have been misled by the expectations you have created by these announcements,” the statement continues. “We believe that a financially attractive proposal from a strategic acquirer is unlikely given the financial position of the company and continue to believe a strategic proposal along the lines we have laid out in prior communications is the better alternative for the company to pursue for the benefit of the shareholders.”
The group emphasized that a distressed fire sale of the company is not in the best interests of the shareholders.
“No prudent decision maker would sell an asset like the company under distress when viable and meaningful alternatives are before them,” the group wrote. “Instead, we believe the better alternative is to invest in the company and fix its business model along the lines we described under the leadership of Gregory Braca, one of the leading bankers in the country today who is intimately familiar with the PA/NY/NJ market area.”
The group closed its letter to the board by saying that it is carefully monitoring the company’s actions during this process.
“We are open to any constructive ideas or dialogues as we move forward but will not tolerate any action by the company that does not maximize long term value for all of the company’s shareholders,” the group wrote. “On this issue, our interests should all be in total alignment.”
The company has not set a timetable for the conclusion of the strategic review and does not intend to comment further “unless and until the board has approved a specific course of action or the company has otherwise determined that further disclosure is appropriate or required by law.”