Dow Jones
WASHINGTON PBOC Holdings Inc. and BYL Bancorp, which two weeks ago called off their planned combination, have demanded from each other the $2 million breakup fee plus expenses called for under the merger agreement.
PBOC Holdings earlier this month said it had terminated its agreement to acquire BYL Bancorp because the OTS hadnt granted regulatory approval by May 1, a condition of the deal. On May 4, BYL Bancorp sent PBOC Holdings a letter rejecting the termination, saying that it had terminated the deal. That letter was also included in the SEC filing.
BYL had demanded that PBOC deliver the termination fee plus expenses totaling $5.5 million within five business days of the May 4 letter. Under the original merger agreement, announced Nov. 2, PBOC said it would acquire BYL for about $39 million, or about $15 a share. The deal was expected to close in the first half of 2001.
According to a letter dated Wednesday and addressed to BYL Bancorps representatives, PBOC Holdings representatives said BYL Bancorp breached warranties and covenants of the merger pact. The letter was filed Thursday with the Securities and Exchange Commission.
PBOC said it complied with its obligations in the merger while BYL Bancorps actions caused the Office of Thrift Supervision to suspend the processing time frames for the application. According to PBOC Holdings, after BYL Bancorps actions caused the OTS to suspend the application, BYL Bancorp admitted in a letter dated April 17 that regulatory approval of the merger by May 1, 2001 (was) not only highly unlikely but virtually impossible.
The companies had the right to review all the information in advance, according to the merger pact.
