A group of Middle Eastern investors seeking to buy Financial General Bankshares Inc. was given a four-month extension yesterday to make a formal offer to current stockholders of the large Washington bank holding company.
At the same time, the investor group was ordered to implement immediately an offer to certain persons who sold their Financial General shares to the group -- either by selling back the stock at the purchase price or by paying the difference between $15 a share and whatever the stock may have been sold for.
Both actions were included in an agreement between the Middle Eastern investors and the Securities and Exchange Commission, approved yesterday by U.S. District Court Judge Oliver Gasch.
To settle an SEC complaint last March 18, in which the regulatory agency charged that a secret takeover attempt had been made, the Middle Eastern group agreed to make a cash tender offer for any or all shares of Financial General within one year.
A special fund of $1 million also was established at that time, to buy back stock or make differential payments to owners who had sold their shares to the outside investors during the period that the SEC said takeover plans had not been disclosed properly.
The Middle Eastern group had wanted to hold up claims on the $1 million fund until it could formally launch a takeover bid, while lawyers for Financial General have been seeking to implement the filing and determination of claims as soon as possible.
A formal tender offer for Financial General shares has been blocked to date, however. Last week, the Federal Reserve Board ruled that such a takeover could not be permitted because Maryland's attorney general ruled earlier that it would violate state law concerning "unfriendly" acquisitions.
From the start of the takeover bid last year, Financial General has been opposed to the Middle Eastern group, which now owns about 20 percent of Financial General shares.
Judge Gasch said yesterday that those in the investor group had "utilized their best efforts to make the tender offer for Financial General common stock within one year... but have encountered unforeseeable delays..."
He said "it remains the firm intention" of the Middle Eastern group to make such an offer, despite the Federal Reserve rebuff. Therefore, it would be "in the best interest of Financial General shareholders as well as the investors for an extension of time to be granted to allow for resolution of all necessary matters prior to making a tender offer," he ordered.
As a result, the deadline for making such an offer for selling shares now owned has been moved back to July 18.
Robert Altman, a lawyer for the Middle Eastern group, said last week that he is contemplating one of several approaches to get Federal Reserve Board approval for the takeover plan.
But Martin Thaler, a Financial Gneral lawyer, said yesterday that the new extension "appears to be futile," in view of the central bank decision, which is not altered by the court order.
Major investors seeking ownership of the $2.2-billion holding company, the area's second largest commercial banking firm, include Sheik Kamal Adham, former head of security in Saudi Arabia; Faisal Saud al Fulaij, financial consultant to the royal family of Kuwait, and Prince Muhammed, son of the ruler of Abu Dhabi.