KS Bank announced Monday, Feb. 12, that its Board of Directors has unanimously adopted a 10-year shareholder rights plan in response to First Citizens Bank’s takeover efforts.
Additionally, the Board has approved and adopted a share repurchase program authorizing KS to purchase, from time to time, up to an aggregate of $2.75 million of its outstanding common stock.
Last year, KS Bank received informal, non-binding “indications of interest” from First Citizens.
The KS Board engaged a nationally recognized investment banking firm to conduct a detailed analysis of the indications of interest and other strategic alternatives.
After thorough and extended consideration of the analysis and other relevant information, the Board unanimously determined to reject the indications of interest and resolved that the continued independent operation of KS is in the best interest of its shareholders.
Previously, the indications of interest created significant unrest among the Bank’s employees and its existing and prospective clients.
Notwithstanding KS Bank’s rejection of First Citizens’ indications of interest, the Board recently learned that First-Citizens Bank and Trust has directly approached certain of KS’s customers and shareholders, expressing its intent to acquire additional shares in KS.
First Citizens has rejected requests to communicate directly with KS. As a result, KS has adopted a shareholder rights plan to provide reassurance to its employees and clients, protect KS Bank against further disruption, and protect shareholders from potential coercive action by First Citizens and any other third parties who may seek to acquire control of KS without negotiating directly with the Board and paying a fair price, including, where appropriate, a control premium.
KS’s Board and management team are focused on enhancing shareholder value, and the Board believes the Rights Plan will preserve KS Bank’s ability to continue implementing its strategic initiatives to drive improved returns and value creation.
This Rights Plan is intended to ensure that the Board remains in the best position to perform its fiduciary duties and to enable all KS shareholders to receive fair and equal treatment.
It is also designed to allow all KS shareholders to realize the long-term value of their investment by reducing the likelihood that any person or group would gain control of KS through open market accumulation without appropriately compensating KS’s shareholders for such control or providing the Board sufficient time to make informed judgments.
The Rights Plan, which was adopted following evaluation and consultation with KS Bank’s outside advisors, is similar to plans adopted by numerous companies, including many financial institutions.
As part of the Plan, the KS Board declared a dividend of one preferred stock purchase right for each outstanding share of KS Bank’s common stock.
The rights will be distributable to shareholders of record as of Feb. 19, as well as to holders of common stock issued after that date, but would only be activated if triggered under the Plan and will not trade separately from KS Bank’s common stock unless and until triggered.
Under the Rights Plan, the rights will generally become exercisable only if a person or group acquires beneficial ownership of 15 percent or more of KS Bank’s common stock.
In that situation, each holder of a right (other than such acquiring person or members of such group, whose rights will become void and will not be exercisable) will be entitled to purchase additional shares of common stock at 50 percent of the then current per share market price.
In addition, at any time after a person or group acquires 15 percent or more of KS Bank’s common stock, KS Bank may exchange the rights (other than those rights belonging to such acquiring person or members of such group, whose rights will become void and will not be exercisable) for shares of KS Bank’s common stock, at an exchange ratio of one share of common stock per right.
The Board has approved and adopted a share repurchase program authorizing KS Bank to purchase, from time to time, up to an aggregate of $2.75 million of its outstanding common stock. Repurchases may be made at management’s discretion at prices management considers to be attractive, subject to the availability of stock, general market conditions, the applicable trading price, future alternative advantageous uses for capital, andKS Bank’s financial performance.
“The Board’s adoption of this repurchase program reflects our commitment to maximize shareholder returns and proactively manage capital,” said President and Chief Executive Officer, Harold T. Keen.