A BankAmerica shareholder has filed a class-action suit against the company's board of directors in an attempt to force serious merger negotiations with First Interstate Bancorp or any other qualified bidder.
The suit, filed Oct. 10 in Delaware, where BankAmerica is incorporated, also seeks independent shareholder representation in any merger or recapitalization talks. The complaint alleges that BankAmerica board members are acting out of self-interest rather than on behalf of the company's 148,000 individual and institutional shareholders.
BankAmerica has moved for dismissal of the suit, a spokesman said Friday. The bank had no further comment.
The lawsuit was filed a week after First Interstate bid $2.8 billion for troubled BankAmerica, the nation's second-largest banking company. First Interstate, a multistate bank holding company based in Los Angeles, has since raised its offer to $3.4 billion.
BankAmerica's board last Monday all but rejected the unwelcome First Interstate proposal, saying that it saw no reason to sell the bank at this point. Board members asked for time to complete a detailed study of the bank's prospects and devise a recovery plan.
Filed by New York Housewife
The lawsuit was filed by Barbara Zarowitz, a New York City housewife who owns 200 BankAmerica shares, on behalf of all common stock holders. She filed another suit against BankAmerica in July, 1985, shortly after the bank reported $338 million in losses. In that suit, also a class action, she seeks repayment for investors' losses caused by the bank's plummeting stock value. The stock was selling for as much as $24 a share in 1984 and is now down to about $15.
That case and 19 others naming BankAmerica directors and officers are pending in U.S. courts.
In both class-action cases, Zarowitz is represented by attorney Richard D. Greenfield, of the Haverford, Pa., law firm Greenfield & Chimicles, which specializes in shareholder litigation.
The law firm won $3.5 million for shareholders from Crocker National Bank in a suit alleging mismanagement filed after the San Francisco bank reported substantial losses in 1983. Crocker was acquired by Wells Fargo & Co. earlier this year.
Greenfield said in an interview Friday that he filed the Zarowitz suit to assure that shareholders' interests are represented in any discussions regarding a merger or injection of capital from an outside investor group.
No Damages Sought Yet
He claimed that board members, including Chairman A. W. Clausen, are solely concerned with preserving the bank's independence--and their own jobs.
He said that the suit does not seek damages at this point but that the bank would be liable for huge claims if it does not accept a merger or other plan that increases the value of the company's shares. First Interstate is offering a package of securities it says are worth $22 a share.
"If they were to reject all offers, and the value of the bank and the corporation and the shares were to deteriorate, we would then hold the board personally accountable for the differential," he said
Greenfield added that he has seen numerous BankAmerica internal documents obtained during previous cases. He said the figures on costs and potential loan losses are worse than any that have been publicly released and suggested that the bank would do well to sell out before the extent of its problems becomes known.
"Unlike some of the most optimistic people on the street, our own view is that the financial statements are totally realistic at this point, which would make it a very opportune time to make a deal," he said.