FOR IMMEDIATE RELEASE
Contact: David Hakensen, H Co., 612-840-4592
Court unseals suit against bank board for willfully obstructing sale
Documents confirm that the Otto Bremer Trust can sell bank
SAINT PAUL, June 15, 2020 — Otto Bremer Trust announced today that its suit to hold seven directors of Bremer Financial Corporation personally responsible for blocking the exploration of a sale of BFC has been unsealed by the Ramsey County Court. The now-public documents, available here, reveal that the bank’s interference has substantially harmed OBT and reduced the charitable support it is able to provide to its local communities.
The unsealed documents demonstrate that the bank has long been aware of OBT’s clear right to sell its BFC holdings should its trustees determine that doing so would protect and enhance the trust’s assets. The documents also show that BFC’s management and directors were informed of this right at least as early as 1988.
For example, a detailed 1988 BFC senior management presentation concludes with a slide titled “A WORD OF CAUTION!” that spells out in plain language the right and the responsibility of the trustees to consider and accept an offer to sell the bank if they determine that a sale is in the interests of OBT’s charitable capacity (image appended to release, highlight added):
Similarly, the suit reveals a June 23, 1988 memorandum to BFC’s executive management from its then-President, subsequent CEO and long-time board member Terry Cummings in which he explains that OBT’s trustees could obtain an offer to sell BFC at any time “and with ownership of 92% of the economic value of the Corporation, they have the power to vote whether to accept or decline such an offer.”
These 1988 documents describe elements of a business re-organization that was put in place in 1989 when the trust, due to a change in the tax laws, was forced to reorganize itself into its current form. That structure—including the rights reserved for OBT’s trustees—is memorialized in an April 20, 1989 prospectus widely circulated at the time. That document is available for review here.
The public disclosure of these documents was delayed by BFC’s efforts to keep them under seal. Now that the documents have been filed publicly, OBT can comment on their disclosure:
“BFC’s efforts to hide these documents from public view are over. The documents show that the bank has known for decades that OBT’s trustees have the right, in fact the responsibility, to sell if they believe a sale enhances the trust’s charitable purposes. That fundamental fact negates the bank’s entire legal position and means that this dispute has been an ill-founded and reckless waste of OBT’s charitable resources.
“BFC’s seven non-Trustee directors have not only wasted millions of dollars in needless legal fees at the expense of the trust and its beneficiaries, their improper tactics have deprived OBT of the opportunity to substantially increase its charitable assets by selling the bank before recent events severely disrupted the marketplace. Those wasted and lost assets could have—should have—been better spent to help those in need across our service area: Individuals and families struggling against daily challenges, against a pandemic, a severe economic downturn and, as we’ve been painfully and tragically reminded by the killing of George Floyd, against the corrosive effects of persistent racism. It is long past the point at which the bank’s obstruction should have ended.”
OBT’s suit, filed on May 13, 2020 as a counterclaim, seeks full recovery of damages from directors Jeanne Crain, Ron James, Mary Brainerd, Glenn McCoy, Kevin Rhein, Wendy Schoppert, and Charles Westling.
About the Otto Bremer Trust
The Otto Bremer Trust is a bank holding company and a private charitable trust based in Saint Paul, Minn., that works at the intersection of finance and philanthropy. Created in 1944 by Otto Bremer, it is today one of the nation’s largest philanthropic organizations and is committed to supporting a better quality of life for residents of Minnesota, Montana, North Dakota, and Wisconsin. OBT is the majority owner of Bremer Financial Corporation, a regional financial services company, and manages a diversified investment portfolio. Since its founding, OBT has invested more than $750 million in people, places, and opportunities in the Upper Midwest. Visit ottobremer.org for more information, including a list of grants and program-related investments. Visit ottobremer.org.
This press release does not constitute or form part of, and should not be construed as, an offer to sell or the solicitation of an offer to buy the securities of BFC or any other securities in any jurisdiction, including the United States, or an inducement to enter into investment activity. No part of this press release, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.