HomeStreet’s clash with a big investor is getting ugly.
The $6.8 billion-asset company said in a press release Thursday that it had invalidated Blue Lion Capital's nomination of two board candidates and a proposal to separate the roles of chairman and CEO. HomeStreet said a letter provided by Blue Lion capital fell short of bylaw requirements on at least 32 instances.
“HomeStreet’s bylaws are for the protection of the company and all of its shareholders,” the release said.
Blue Lion, which owns about 6% of HomeStreet’s stock, has spent months complaining about the Seattle company's growth strategy, which focuses heavily on bank acquisitions and mortgages. Blue Lion had sought a board seat for Charles Greige Jr., its managing partner, but HomeStreet recently rejected the request.
Blue Lion did not immediately respond to a request for comment. Such disagreements between banks and activist investors often escalate into legal action.
HomeStreet’s legal counsel outlined Blue Lion’s failures to satisfy the company’s bylaws in a letter filed with the Securities and Exchange Commission Thursday. The errors include Blue Lion’s failure to state the number of shares it owns and the omission of other required materials.
HomeStreet said it received the letter from Blue Lion the afternoon of Feb. 23, one day before the deadline for shareholder notices. The company said that the letter did not satisfy the bylaw requirements by the Feb. 24 deadline.
“Because Blue Lion failed to deliver a notice in accordance with the bylaw requirements prior to the deadline for all HomeStreet shareholders, Blue Lion no longer has the right to bring any proposals for consideration or nominate any candidates for election to the Board at the upcoming meeting,” the release said.
Keefe, Bruyette & Woods and Sidley Austin advised HomeStreet.