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Delaware judge: BankAtlantic asset sale to BB&T violates TruPS rights
By Jim Witters
Wilmington, Del., Feb. 27 - BankAtlantic Bancorp Inc.'s sale of BankAtlantic's branches and deposits to BB&T Corp. violated the terms of BankAtlantic's trust-preferred securities, a judge ruled Monday in the Delaware Court of Chancery.
Judge J. Travis Laster permanently enjoined the sale, which TruPS holders said allowed BB&T to cherry pick the performing assets.
The sale would have left the trust-preferred securities "a carcass" of criticized and non-performing loans to back the $333 million in claims, the TruPS holders argued during the Chancery Court trial.
BankAtlantic Bancorp claimed the retained assets are worth $623 million.
Under the terms of the BB&T sale, BankAtlantic Bancorp would have paid about $289 million in principal TruPS debt. The TruPS holders wanted all their claims to be paid or be assumed by BB&T when the sale closed.
"The Delaware Court of Chancery has concluded that, were we to complete the sale of BankAtlantic to BB&T Corp., we would be selling all or substantially all of Bancorp's assets. Thus, the court held, we were obligated to structure a transaction in which the buyer would assume all of our obligations to the holders of Bancorp trust preferred securities," said Alan B. Levan, BankAtlantic's chairman and CEO.
"We are obviously disappointed as this ruling prevents the transaction from going forward as currently structured. However, BankAtlantic will continue to operate in its normal course while we consider our options," Levan said. "This order is an obvious setback to a transaction we believed and continue to believe to be in everyone's best interests. In the days ahead we will be considering all of the options available to us."
Levan testified during the trial that if the BB&T sale is blocked, the bank will fail and be taken over by the government.
BankAtlantic Bancorp is a Fort Lauderdale, Fla., bank holding company.
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