First California hires KBW to test waters for sale
In a move that could foreshadow the sale of the company, Westlake Village-based First California Financial Group has hired an outside investment bank and a law firm to undertake a “strategic review” of the company’s business plan and options.
But it is not clear whether the hiring of advisers signals a deal in the works or a public gesture from the bank’s management that it is acting decisively on shareholder concerns. First California has been under pressure from major shareholders to sell itself since January, when the company’s stock price dropped below its book value.
The shares have since rebounded, but the intensity of the dispute ratcheted up in May when First California spurned a buyout offer for $7.25 a share from Los Angeles-based Pacific Western Bank.
First California announced that it had hired investment bank Keefe, Bruyette & Woods, Inc. as its financial adviser and Skadden, Arps, Slate, Meagher & Flom as legal adviser on Aug. 1. The news came less than a week after another angry open letter came from a major shareholder.
The missive from New York-based Loeb Capital Management, which said it owns 2.1 million shares of First California, expresses frustration that the PacWest offer hasn’t been turned into a bargaining chip with other buyers.
“In our opinion, a credible cash offer has been made and shareholders have been treated to ‘double-talk’ on many levels with respect to this springboard (a credible offer) from which to run an auction process to sell the Company to the highest bidder,” the letter reads. “At no point has FCAL simply stated that it is engaged in a process to explore strategic alternatives to maximize shareholder value. Rather, we believe shareholders have been subjected to vague press releases that give shareholders no assurance that the board takes its fiduciary duties seriously.”
In its release announcing the advisers, First California pointed out that it recently reported a 33 percent increase in net income to $2.9 million for the second quarter and that shares have rebounded to well above book value.
“The board remains fully committed to taking all appropriate and necessary actions to enhance the bank’s value. Our board and management team are open minded and intend to evaluate a variety of options thoughtfully and carefully,” board chairman Robert Gipson said in a news release.
First California shares were down 2.4 percent to $6.55 on Aug. 1, but the firm’s news release came out after market close.