A federal judge yesterday refused to block a preliminary bout in the Financial General Bankshares takeover fight, but did order a change in the rules.
Lawyers for Financial General had asked for an injunction prohibiting the group trying to buy control of the company from making a recision offer to persons who sold Financial General stock last year. The offer would allow the sellers to buy their stock back.
The company contended the offer sent to the stock sellers did not adequately explain their options, and made it difficult for them to determine whether to accept the offer.
U.S. District Court Judge Oliver T. Gasch yesterday ruled that sellers got sufficient information.
But Gasch said he was concerned that not all the stock sellers had been notified of the offer.
He gave lawyers for Financial General and the group of Middle Eastern investors seeking control of the company 10 days to submit competing plans for notifying the stock sellers.
The recision offer is required by a Securities and Exchange Commission settlement issued last year.
Gasch yesterday extended the deadline for completing the offer by 30 days and indicated he still could block the offer entirely if he is not satisfied with the plan for notifying the sellers.
Under terms of the SEC settlement, the recision offer must be completed before the Middle Eastern group can make a public tender offer and try to buy control of the Washington bank holding company.