More Investors Riled by Structure of BankAtlantic Sale to BB&T

BankAtlantic Bancorp's deal to sell the bulk of its assets to BB&T Corp. has come under attack from yet another BantAtlantic investor.

Wells Fargo Bank, the trustee for an investor in BankAtlantic's trust-preferred securities, notified the bank last week that the proposed deal, in which BankAtlantic would sell only the best parts of its franchise while retaining the problem assets, violates the covenants of their debt agreement.

BankAtlantic disclosed its receipt of the default notice in a Securities and Exchange Commission filing late Thursday.

It is at least the fourth BankAtlantic has received from trust-preferred investors since the $3.7 billion-asset company announced Nov. 1 that it was selling its Florida branch network and the bulk of its performing assets to BB&T of Winston-Salem, N.C., for about $300 million. Upon completion of the sale, BankAtlantic would retain roughly $624 million of nonperforming and underperforming loans and recast itself as a specialty lender.

Hildene Capital, a New York hedge fund, was the first investor to object to the deal's structure, and has filed a suit to block the deal. The crux of its argument is that it invested $237 million in BankAtlantic to support a bank, not "a rag-tag group of assets," and therefore BB&T, as the buyer, should assume that debt.

Zions First National Bank, representing another group of trustees, has joined the lawsuit while Wilmington Trust Co., on behalf of other investors, has filed a suit of its own. BankAtlantic has attempted to have the Hildene suit dismissed, but a Delaware judge denied that motion earlier this month.