Roslyn to Shareholders: Say 'Yes' to N.Y. Thrift Deal

In an effort to preserve a troubled merger, Roslyn (N.Y.) Bancorp chairman Joseph L. Mancino has written to his shareholders urging them to approve his company's pending merger with T R Financial Corp., the parent of Roosevelt Savings Bank.

"Roslyn and Roosevelt are compatible in every way," Mr. Mancino said in a letter dated Monday, his second to shareholders in less than a week. "Therefore, I urge you to vote FOR the merger."

Such letters have rarely been needed in banking, because the completion of deals has usually been a foregone conclusion. But given the recent volatility in the stock market, more bank executives could find themselves in the same straits as Mr. Mancino.

Peppering his text with capital letters to underscore the urgency of the situation, Mr. Mancino reminded shareholders that failing to vote by Dec. 22 in favor of the merger would have the same effect as voting against it. He suggested readers contact the company's proxy solicitor, Kissel-Blake, "should you need assistance voting your shares."

Roslyn agreed to buy T R, Garden City, N.Y., on May 26 for about $1 billion. The deal would more than double Roslyn's size, to $7.7 billion of assets. The two companies said combining would enhance shareholder returns and perhaps the new, bigger company would attract the eye of another, bigger buyer.

But many shareholders disliked the proposed deal from the start.

Roslyn shares fell nearly 15% in value, to $23.5625, the day the deal was announced. Roslyn's stock slipped further in August and September, when investors shed shares in virtually all financial institutions. Roslyn shares Tuesday closed up 43.75 cents, to $18.875.

At that price, the all-stock merger may not be completed.

The deal terms state that the T R board may call off the sale if Roslyn's shares trade at an average of under $20.72 after regulators and shareholders sign off on the deal. T R may also walk away if Roslyn shares fall below an index of selected thrift stocks, unless Roslyn increases its offer. Currently Roslyn is trading below the index, said T R spokesman Ted Ayvas.

But T R, which has received advice and two opinions from Goldman, Sachs & Co. that the merger is fair to its shareholders, said in a Nov. 16 filing with the Securities and Exchange Commission that is its "present intention ... not to elect to terminate the merger agreement." Mr. Ayvas said the company's view has not changed.

The Nov. 16 statement calmed the market considerably. Shortly before the filing shares of T R were trading at 30% below the value of the shares to be received from Roslyn, reflecting investor doubt that the deal would be completed.

But now T R shares trade at just 4% below the takeover price, reflecting optimism that the deal will go through.

"The market's expectations have changed dramatically," said Kevin Timmons, an analyst with First Albany Corp. "But still, this is not riskless."

The aura of risk surrounding this deal helps explain why Mr. Mancino has hired a proxy solicitor and sent letters to rouse his shareholders since he started seeking their approval of the merger last month.

Executives generally reserve such direct and public shareholders solicitations during hostile takeovers or other situations where shareholder approval is considered dubious.

Last Wednesday Mr. Mancino sent a letter touting the T R acquisition as a "potent combination committed to enhancing stockholder value through well-managed growth-A STRATEGY DESERVING STOCKHOLDERS' APPROVAL!"

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