Cascade Bancorp in Bend, Ore., has filed a lawsuit against Cohen & Co. Financial Management, alleging that the investment firm is holding up a capital-raising effort on which Cascade's future depends.

The $2.2 billion-asset company alleges that Cohen has failed to honor an agreement to transfer $66.5 million of trust-preferred securities to Cascade for $13.3 million in redeemable notes, which would be paid at the closing of the effort.

Cascade, which filed the suit Monday in federal court in Eugene, Ore., is operating under a regulatory order to boost capital ratios, and its lead investors had agreed to inject more capital if Cascade could raise some on its own. Yet investors are unwilling to pony up until Cascade can trim some of its debt, the company's chief executive, Patricia L. Moss, said in a press release Monday.

"As of today, private-equity investors stand ready and willing to make a capital commitment upon Cohen Financial honoring its obligation under the agreement," Moss said. "A successful capital raise is integral to our company's future."

Among other things, Cascade is suing Cohen for breach of contract. A Cohen spokesman would not comment on the lawsuit.

Meanwhile, Cascade said David F. Bolger and an affiliate of Donald Marron's Lightyear Capital LLC private-equity fund have agreed to give Cascade until the end of August to find more equity partners. The original deadline was May 31.

On March 31 the company had a leverage ratio of 3.94% and a total risk-based capital ratio of 6.35%.

Bolger has agreed to invest $25 million and Lightyear to invest $40 million, though Cascade also must raise $85 million in equity.

Brett Rabatin, an analyst at Sterne Agee & Leach, said others have faced similar challenges. Private-equity firms are often unwilling to invest unless the companies unload some of their trust-preferred securities. "It's a hang-up to getting these transactions done, which is a shame, when management has worked hard to get capital lined up," Rabatin said.

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