THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, July 29, 1994 TAG: 9407290525
SECTION: BUSINESS PAGE: D01 EDITION: FINAL
SOURCE: By TOM SHEAN, STAFF WRITER
LENGTH: Short : 43 lines
Essex Financial Partners L.P., the Virginia Beach-based owner of Essex Savings Bank, has agreed to settle a class-action lawsuit brought by disgruntled investors last December in a Texas court.
Essex, whose thrift has been hobbled in recent years by chronic losses and regulatory difficulties, also announced plans to convert later this year from a partnership to a holding company.
As part of the proposed settlement, present and former holders of Essex partnership units who are part of the class-action suit will share $1 million of preferred stock to be issued by the new holding company, Essex said.
About 5,000 people are in the settlement class, including 2,500 existing unit holders, estimated Gene D. Ross, president and chief executive of Essex Financial Partners' general partner.
The proposed settlement also calls for PaineWebber Inc. to forgive $20 million of debt owed by Essex Financial Partners and its subsidiaries. PaineWebber had provided investment banking servives to Essex in the partnership's initial public offering in 1989.
Essex's conversion to a holding company is part of a broader effort to streamline and raise more capital, Ross said.
Although a partnership gave Essex investors tax advantages, it confused investors and hindered Essex plans to raise capital, Ross said.
While the conversion to a holding company requires approval of the Essex partners, Ross said he expects the process to conclude in October. Proxy statements describing the conversion plan and asking for partners' approval will be distributed in mid-August, he said.
The ratio for converting Essex's partnership units to common shares in the new company has not yet been determined, Ross said. Essex has 2,078,000 partnership units trading on the American Stock Exchange.
The new holding company for Essex Savings Bank has been chartered in Delaware but will be based in Virginia Beach, Ross said. by CNB