Dr James King, Chairman of the Board of Directors, told shareholders in a circular that, previously, "directors did not seek authority to introduce a €˜poison pill' rights plan because Bermuda licensed banks still had the protection of the so-called '60/40 rule' in the Banks Act, 1969. That Act will be repealed in coming months". The "60/40 rule" required at least 60% of the Bank's stock to be owned and controlled by Bermudians. In view of the international business environment in which the Bank now operates, Dr. King added "the Bank's Board in recognition of its fiduciary responsibilities to protect shareholders' interests, proposes the adoption of a Shareholders' Rights Plan which will force a potential acquirer to negotiate fairly with the Bank's Board, failing which the acquirer will suffer substantial dilution of his interest in the Bank".
The proposed Rights Plan will trigger the poison pill once someone acquires 15% of issued ordinary shares. Adoption of the Plan by shareholders includes authority to increase share capital and capitalize amounts available for distribution should the Plan be triggered.
As at 30th June 1999 Return on Equity was 15.6% for the year with earnings per share of $1.92. Net book value per share, excluding shares purchased for the Stock Option Trust, was $12.86 while market value on that date was $15.30.
The Bank is being advised by Lehman Brothers.