Patriot National Bancorp Inc. has been sued by a prospective investor who thought he had a deal in hand to acquire the Stamford-based bank, only to see the board consider a midnight offer at a substantially higher price.
In the second quarter, the Stamford-based owner of Patriot National Bank lost $4.6 million due to problem loans in its commercial real estate and construction portfolio. The bank has stopped originating new loans in the commercial sector while it works through its problem loans.
Between June 2008 and this past June, Patriot National increased local deposits 11 percent, slightly ahead of the pace of Bridgeport-based People”™s United Financial Inc. and several other local competitors. The bank also has a few branches in adjacent Westchester County, N.Y.
As the third quarter came to a close, Patriot National received an unsolicited takeover offer at a “considerably higher” price than an existing $50 million investment bid it spent the summer negotiating.
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Earlier this year, an investor group led by Michael Carrazza offered $50 million to take a controlling interest in Patriot National, which would keep the bank compliant with federal rules defining well-capitalized institutions.
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The parties were finalizing a definitive agreement in late September when a second investor swooped in with an offer for Patriot National on September 30. Meantime, a week earlier, director Brian Fitzgerald had announced he would resign from the board for health reasons effective immediately.
After Patriot National”™s board informed Carrazza it wanted more time to consider the new offer, he sued Oct. 9 in Stamford Superior Court, claiming breach of a letter of intent assuring him an exclusive negotiating position.
Patriot National stated it remains open to completing a sale to Carrazza even as it continued evaluating the competing offer at press deadline, but said it would defend itself and said it believes Carrazza filed the suit in order to chase away other investors. Patriot National stated that Carrazza requested additional due diligence information after filing the suit that would be normal in the course of an acquisition, and said it would furnish the information.
In his lawsuit, Carrazza is seeking unspecified compensatory damages; more than $100,000 as a breakup fee; and an attachment that would force Patriot National to set aside now any money it might have to pay in the event Carrazza wins in court.
