Atlantic Coast, Bond Street Drop Controversial Deal Clause

Shareholders of Atlantic Coast Financial (ACFC) will no longer have to wait a year for 40% of their payout.

Atlantic Coast in Jacksonville, Fla., is in the process of being sold to Bond Street Holdings in Weston, Fla., for $13.1 million. On Tuesday the two companies announced an amendment to their $5-per-share deal: they have eliminated a holdback of $2 per share to cover any shareholder suits.

"We have continued to carefully review all aspects of the proposed merger with Atlantic Coast Financial Corp., and we have become confident that we do not need a contingency reserve for this transaction,"

Kent Ellert, the chief executive of Bond Street's Florida Community Bank unit, said in a press release.

Atlantic Coast, which has assets of $784 million, has spent the last two months bickering about the deal with Jay Sidhu, an investor and its former chairman. Sidhu, who is also the chairman and CEO of Customers Bancorp (CUUU) in Wyomissing, Pa., has objected to several aspects of the deal, including its valuation of 32.6% of tangible book. He also has complained that the $2-per-share reserve deters shareholders from challenging the agreement.

Sidhu and Atlantic Coast have conducted their fight in a series of letters to shareholders, including some

tersely worded dispatches last week.

The deal is expected to close this quarter, but the companies have not announced the date of the shareholder vote. Sidhu has urged Atlantic Coast to hold its annual shareholder meeting first, to give investors a chance to vent.

Meanwhile, The Albury Investment Partnership, an Australian firm which owns a 9.97% stake in Atlantic Coast, said in a filing this month that it plans to vote against the sale to the $3.2 billion-asset Bond Street.

Sidhu and a Chicago attorney for Albury Investment did not return calls seeking comment. Bond Street and Atlantic Coast executives are expected to comment Tuesday afternoon.