Multimillionaire Joe L. Allbritton and the directors of Riggs National Bank yesterday reached an agreement that gives the former Washington Star owner control of the bank, whose management had tried to block the takeover in a long and bitter fight.
Under the terms of a settlement hammered out over the weekend, Allbritton will be able to acquire 40.1 percent of the bank's stock for at least $70 million, assuming no objection to the acquisition by the Comptroller of the Currency. In addition, Allbritton and an associate, Thomas W. Wren, will be named to the board of directors of the bank, the area's largest financial institution.
Riggs' board of directors met yesterday to ratify the settlement, an action followed by the dismissal late yesterday afternoon of Riggs' legal challenges to the takeover and Allbritton's counterclaims.
Progress toward a settlement began late last week after Allbritton's attorneys filed papers wiping out some of Riggs' legal arguments against the attempt to seize control of the bank, which has assets of $3 billion.
Attorneys worked on terms of the agreement over the weekend. By Sunday afternoon negotiations reached the point where Allbritton met face-to-face with Riggs chief executive officer Vincent C. Burke Jr. and the executive committee of the board of directors of the bank's offices. The meeting was described as "personal." None of the attorneys involved in the fight was present.
The terms of the agreement represent a major victory for Allbritton with some face-saving concessions to Riggs. It allows his tender offer to buy a majority of Riggs shares to proceed, providing that he may purchase up to 750,000 shares. As of the close of business last Friday, approximately 749,000 shares had been offered to Allbritton.
Under the agreement Allbritton will vote Riggs shares controlled by him in favor of a bank proposal to form a holding company. In court, Allbritton's attorneys had said the holding company proposition would dilute his ability to name directors and otherwise exert control.
With Allbritton acquiring such a substantial share of the bank's stock, however, the issue appeared moot.
Allbritton also agreed, as he had earlier in the process, to make additional financial disclosures to bank shareholders and pledged not to propose a holding company transaction as a means of repaying the debt incurred to buy bank stock.
The bank agreed to provide for preemptive rights for stockholders, which means Allbritton could protect his control if the bank issued additional shares of stock.
The announcement of the settlement was as warm and effusive as the fight had been bitter. Burke said that he and the board "believe that Mr. Allbritton will be a constructive force in helping Riggs to provide expanded banking services to the communities it serves."
Allbritton said good things about Riggs management and directors and said the settlement "would give all parties an opportunity to work together harmoniously to build a bank in the interests of its depositors, stockholders and this community."
An attorney for Allbritton, Neal McCoy, said that Burke and Riggs president Daniel Callahan II will be retained. It was unclear who Allbritton and Wren, president of Allbritton's Texas bank holding company, would replace on the board, but there is one vacancy.
"I look for the roster of players to change substantially at Riggs over the next year, with many new directors and top officers," said one stock broker, contemplating what may occur.
The battle was formally joined Feb. 9 when Allbritton offered to buy at least 600,000 shares of the bank's stock for $67.50 -- well above the $50 level at which the stock had been trading. Allbritton had already acquired about 15 percent ownership when he bought a large block of stock from Riggs director Jorge Carnicero.
Riggs' directors advised shareholders against accepting Allbritton's offer and fought the acquisition on a number of fronts including the Federal Reserve Board and the federal courts.
In court, Riggs was initially successful, obtaining first a temporary restraining order blocking the tender offer and later a preliminary injunction. But on the heels of the preliminary injunction Allbritton's legal team from the law firm of Skadden & Arps, famous for its roles in takeover fights, began remedying the problems that had led U.S. District Court Judge Norma Holloway Johnson to side with Riggs.
The attorneys filed additional disclosure about Allbritton's finances, including estimates that his net worth is $200 million, and took steps to make it absolutely clear that the Comptroller of the Currency had no objections to the Allbritton offer.
Riggs had argued that Allbritton failed to give shareholders sufficient information on which to base a decision whether to sell and hinted that his assets might not be sufficient to cover the $70 million loan he obtained for the stock purchase and the millions of dollars in interest payments on the loan.
While the courtroom battle went on, shareholders offered their stock to Allbritton in numbers that made it clear that legal manuevers were all that stood between Riggs bank and new ownership.
In many ways, transfer of control of the bank to Allbritton marks a new era in Washington business.Allbritton and his spokespersons have been quick to portray Allbritton as a Washington businessman, and he does have substantial interests here, including television station WJLA. He also has one of several homes here and his son attends school in Washington.
But there is a difference between Allbritton and the men who have controlled Riggs in the past. The Riggs board includes men who while they may have been extremely successful in their own right also represent old moneyed Washington.
Allbritton is originally from Mississippi but built a fortune that spans Texas, California, Washington and London and includes interests in communications, banking, insurance and the funeral industry.
But there are similarities, too. One of Allbritton's platoon of lawyers summed up the fight this way:
"This is a fight between a bunch of rich people, some of whom have a bank. . . ."