An activist investor known for pressuring bankers to sell their companies is threatening to wage a proxy fight against Southern Connecticut Bancorp Inc. if it fails to find a buyer soon.
Lawrence B. Seidman claims he was told by the New Haven company's chairman, Elmer Laydon, that it has received interest from at least three potential buyers, including a letter of intent from one willing to pay $9 a share.
In a letter he sent to Mr. Laydon made public last week, Mr. Seidman asked why a deal had not been announced, demanded that the board disclose details about its negotiations, and said that if no deal is struck, he would nominate himself and an ally, Neal S. Axelrod, as directors at the next shareholders' meeting.
"Hopefully we can avoid a costly proxy contest," said the letter, dated Jan. 16.
In a Securities and Exchange Commission filing Friday, the company disclosed that it "has been and continues to consider strategic alternatives available to the company to enhance shareholder value.
But it took issue with Mr. Seidman's claim that a vote to sell the company had taken place.
John H. Howland, Southern Connecticut's president and chief operating officer, said in the filing that even though the company "from time to time" attracts interest from potential buyers, the board has not approved a sale.
Mr. Howland did not return a call seeking comment.
Mr. Seidman owns a 6.2% stake in Southern Connecticut, making him one of its largest shareholders.
In an interview last week, he would not identify the potential buyers or give specifics about what prompted the letter to Mr. Laydon.
In agitating for a sale, Mr. Seidman has given a boost to the company's stock, which had hovered at around $5 a share for several months. On Jan. 21, the day after his letter was made public, Southern Connecticut's shares hit a 52-week high of $8.90. The shares were closed at $6.81 Tuesday.
Mr. Seidman has prodded other companies toward sales in recent years, including the $3 billion-asset Yardville National Bancorp in Hamilton, N.J. He sharply criticized executives there for years before its March sale to PNC Financial Services Group Inc. in Pittsburgh.
John Carusone, the president and CEO of the consulting firm Bank Analysis Center Inc. in Hartford, Conn., said publicizing board negotiations is the type of "predatory" behavior that gives activist investors a bad reputation.
"It is the board's decision to evaluate strategic alternatives, and it should be able to do so without having a financial food fight aired publicly," Mr. Carusone said. "I think it's unseemly, irregular, and inappropriate."
Southern Connecticut, which is principally a commercial and industrial lender, has put up "mixed results" financially, he said, but buyers might consider the company attractive, because it is in a good market and has a strong following in the business community.
With noncurrent loans rising to 5.6% of its total, its Bank of Southern Connecticut swung to a $16 million loss in the third quarter, from a $16 million profit a year earlier, according to data from the Federal Deposit Insurance Corp.
But its capital ratios remained strong, and the company announced this month that it is evaluating whether to accept $3.3 million of capital through the Treasury Department's Troubled Asset Relief Program.
