SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9
(RULE 14d-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
COHOES BANCORP, INC.
-------------------------
(Name of Subject Company)
COHOES BANCORP, INC.
------------------------------------
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
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(Title of Class of Securities)
192513 10 9
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(CUSIP Number of Class of Securities)
HARRY L. ROBINSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
COHOES BANCORP, INC.
75 REMSEN STREET
COHOES, NEW YORK 12047
(518) 233-6500
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(Name, address and telephone number of person authorized to receive notice
and communications on behalf of the person(s) filing statement)
Copy to:
RAYMOND A. TIERNAN, ESQ.
GERALD F. HEUPEL, JR. ESQ.
PHILIP R. BEVAN, ESQ.
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
734 15TH STREET, N.W.
WASHINGTON, D.C. 20005
(202) 347-0300
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
This solicitation/recommendation statement on Schedule 14D-9 is filed by
Cohoes Bancorp, Inc., a Delaware corporation ("Cohoes"), in relation to the
exchange offer disclosed in the Schedule TO, filed on November 1, 2000 with
the Securities and Exchange Commission, of TrustCo Bank Corp NY, a New York
corporation ("TrustCo"), to exchange each issued and outstanding share of
Cohoes common stock, par value $.01 per share, for cash in the amount of
$10.80 and a fractional share of TrustCo common stock, par value $1.00 per
share, with a value of $7.20 upon the terms and subject to the conditions
described in the Schedule TO, the Registration Statement filed on Form S-4 by
TrustCo on July 11, 2000, as amended, and the prospectus contained therein
(each of which is an exhibit and incorporated by reference into TrustCo's
Schedule TO), as well as in the Rule 424(b)(3) prospectus dated October 30,
2000 filed by TrustCo on November 1, 2000.
In response to Items 1 through 8 of this Schedule 14D-9, Cohoes hereby
incorporates by reference its disclosure document, included herewith as
Exhibit (a)(1), which contains the information responsive to the requirements
of this Schedule 14D-9.
ITEM 9. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
------- ----------------------
(a)(1) Solicitation/Recommendation Statement, first mailed to Cohoes
stockholders on November 2, 2000
(a)(2) Information regarding Cohoes' certificate of incorporation and
bylaws (incorporated by reference from the Hudson River Bancorp,
Inc.'s Registration Statement on Form S-4 filed June 26, 2000, as
amended, and Hudson River's Rule 424(b)(3) prospectus filed July
18, 2000)
(a)(3) Press release, dated June 26, 2000, by Cohoes (incorporated by
reference from the filing made on June 26, 2000 by Cohoes as a
Rule 425 communication)
(a)(4) Newspaper advertisement addressed to shareholders, customers,
etc., of Cohoes and Hudson River (incorporated by reference from
the filing made by Cohoes and Hudson River on July 13, 2000 as a
Rule 425 communication)
(a)(5) Newspaper advertisement addressed to shareholders, customers, etc.
of Cohoes and Hudson River (incorporated by reference from the
filing made by Cohoes and Hudson River on July 20, 2000 as a Rule
425 communication)
(a)(6) Letter to Shareholders of Cohoes and Hudson River, dated July 20,
2000 (incorporated by reference from the filings made by Cohoes
and Hudson River on July 20, 2000 and July 21, 2000, respectively,
as a Rule 425 communication)
(a)(7) Newspaper advertisement addressed to shareholders, customers, etc.
of Cohoes and Hudson River (incorporated by reference from the
filing made by Cohoes and Hudson River on July 27, 2000 as a Rule
425 communication)
2
(a)(8) Press release, dated July 27, 2000, by Cohoes (incorporated by
reference from the filing made on July 27, 2000 by Cohoes as a
Rule 14a-12 communication and on July 28, 2000 as a Schedule 14D-9
communication)
(a)(9) Letter to shareholders of Cohoes and Hudson River, dated July 28,
2000 (incorporated by reference from the filing made by Cohoes and
Hudson River on July 28, 2000 as a Rule 425 communication)
a)(10) Updated Investor Presentation/Synopsis of the Cohoes-Hudson River
merger, dated August 2, 2000 (incorporation by reference from the
filing made by Cohoes and Hudson River on August 2, 2000 as a Rule
425 communication)
(a)(11) Newspaper advertisement addressed to shareholders of Cohoes and
Hudson River (incorporated by reference from the filing made by
Cohoes and Hudson River on August 7, 2000 as a Rule 425
communication)
(a)(12) Letter to shareholders of Cohoes and Hudson River, dated August 7,
2000 (incorporated by reference from the filing made by Cohoes and
Hudson River on August 7, 2000 as a Rule 425 communication)
(a)(13) Press release dated August 9, 2000 by Cohoes (incorporated by
reference from the filing made on August 9, 2000 by Cohoes as a
Rule 425 communication)
(a)(14) Press release dated August 10, 2000 by Cohoes (incorporated by
reference from the filing made on August 10, 2000 by Cohoes as a
Rule 425 communication)
(a)(15) Newspaper advertisement addressed to shareholders, customers, etc.
of Cohoes and Hudson River (incorporated by reference from the
filing made by Cohoes and Hudson River on August 11, 2000)
(a)(16) Press release dated September 28, 2000 by Cohoes and Hudson River
Bancorp, Inc. (incorporated by reference from the filing made on
September 28, 2000 by Cohoes as a Rule 425 communication)
(a)(17) Press release dated September 28, 2000 by Cohoes (incorporated by
reference from the filing made on September 28, 2000 by Cohoes as
a Rule 425 communication)
(a)(18) Press release dated October 19, 2000 by Cohoes (incorporated by
reference from the filing made on October 19, 2000 by Cohoes as a
Rule 14a-12 communication)
(a)(19) Press release dated October 24, 2000 by Cohoes (incorporated by
reference from the filing made on October 24, 2000 by Cohoes as a
Rule 14a-12 communication)
(e)(1) Information regarding executive compensation and related matters
(incorporated by reference from Cohoes' definitive proxy
statement, dated October 23, 2000)
3
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
COHOES BANCORP, INC.
By: /s/ Harry L. Robinson
--------------------------------------
Name: Harry L. Robinson
Title: President and Chief Executive
Officer
Dated: November 2, 2000
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- --------------------
(a)(1) Solicitation/Recommendation Statement, first mailed to Cohoes
stockholders on November 2, 2000
(a)(2) Information regarding Cohoes' certificate of incorporation and
bylaws (incorporated by reference from the Hudson River Bancorp,
Inc.'s Registration Statement on Form S-4 filed June 26, 2000, as
amended, and Hudson River's Rule 424(b)(3) prospectus filed July
18, 2000)
(a)(3) Press release, dated June 26, 2000, by Cohoes (incorporated by
reference from the filing made on June 26, 2000 by Cohoes as a
Rule 425 communication)
(a)(4) Newspaper advertisement addressed to shareholders, customers,
etc., of Cohoes and Hudson River (incorporated by reference from
the filing made by Cohoes and Hudson River on July 13, 2000 as a
Rule 425 communication)
(a)(5) Newspaper advertisement addressed to shareholders, customers, etc.
of Cohoes and Hudson River (incorporated by reference from the
filing made by Cohoes and Hudson River on July 20, 2000 as a Rule
425 communication)
(a)(6) Letter to Shareholders of Cohoes and Hudson River, dated July 20,
2000 (incorporated by reference from the filings made by Cohoes
and Hudson River on July 20, 2000 and July 21, 2000, respectively,
as a Rule 425 communication)
(a)(7) Newspaper advertisement addressed to shareholders, customers, etc.
of Cohoes and Hudson River (incorporated by reference from the
filing made by Cohoes and Hudson River on July 27, 2000 as a Rule
425 communication)
(a)(8) Press release, dated July 27, 2000, by Cohoes (incorporated by
reference from the filing made on July 27, 2000 by Cohoes as a
Rule 14a-12 communication and on July 28, 2000 as a Schedule 14D-9
communication)
(a)(9) Letter to shareholders of Cohoes and Hudson River, dated July 28,
2000 (incorporated by reference from the filing made by Cohoes and
Hudson River on July 28, 2000 as a Rule 425 communication)
(a)(10) Updated Investor Presentation/Synopsis of the Cohoes-Hudson River
merger, dated August 2, 2000 (incorporation by reference from the
filing made by Cohoes and Hudson River on August 2, 2000 as a Rule
425 communication)
(a)(11) Newspaper advertisement addressed to shareholders of Cohoes and
Hudson River (incorporated by reference from the filing made by
Cohoes and Hudson River on August 7, 2000 as a Rule 425
communication)
(a)(12) Letter to shareholders of Cohoes and Hudson River, dated August 7,
2000 (incorporated by reference from the filing made by Cohoes and
Hudson River on August 7, 2000 as a Rule 425 communication)
(a)(13) Press release dated August 9, 2000 by Cohoes (incorporated by
reference from the filing made on August 9, 2000 by Cohoes as a
Rule 425 communication)
(a)(14) Press release dated August 10, 2000 by Cohoes (incorporated by
reference from the filing made on August 10, 2000 by Cohoes as a
Rule 425 communication)
5
(a)(15) Newspaper advertisement addressed to shareholders, customers, etc.
of Cohoes and Hudson River (incorporated by reference from the
filing made by Cohoes and Hudson River on August 11, 2000)
(a)(16) Press release dated September 28, 2000 by Cohoes and Hudson River
Bancorp, Inc. (incorporated by reference from the filing made on
September 28, 2000 by Cohoes as a Rule 425 communication)
(a)(17) Press release dated September 28, 2000 by Cohoes (incorporated by
reference from the filing made on September 28, 2000 by Cohoes as
a Rule 425 communication)
(a)(18) Press release dated October 19, 2000 by Cohoes (incorporated by
reference from the filing made on October 19, 2000 by Cohoes as a
Rule 14a-12 communication)
(a)(19) Press release dated October 24, 2000 by Cohoes (incorporated by
reference from the filing made on October 24, 2000 by Cohoes as a
Rule 14a-12 communication)
(e)(1) Information regarding executive compensation and related matters
(incorporated by reference from Cohoes' definitive proxy
statement, dated October 23, 2000)
6
[COHOES LOGO]
November 2, 2000
Dear Stockholder:
Recently, TrustCo Bank Corp NY commenced its hostile tender offer for
your shares of Cohoes stock.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU REJECT TRUSTCO'S
OFFER BY NOT TENDERING YOUR SHARES.
WE URGE YOU TO SHOW YOUR SUPPORT FOR COHOES BY RETURNING THE ENCLOSED
BLUE PROXY TODAY.
Our recommendation is based on the following reasons:
WE ARE EXPLORING ALL OF OUR STRATEGIC OPTIONS, INCLUDING A SALE OF COHOES
* We publicly announced on September 28, 2000 that we would explore all
of our strategic options, including a sale of Cohoes.
* We have subsequently entered into confidentiality agreements with
several larger financial institutions that have been active
acquirors.
* We increased our quarterly cash dividend by 14% and announced our
intention to repurchase up to approximately 12.5% of our stock, to
the extent it does not interfere with our marketing of Cohoes.
* We are actively pursuing a sale of Cohoes, and we expect to complete
the exploration of our strategic options before TrustCo can even hope
to complete its hostile tender.
WE BELIEVE TRUSTCO WANTS TO DISCOURAGE COMPETITIVE OFFERS
* We invited TrustCo to participate in our marketing process, and they
instead commenced a proxy fight and a hostile tender offer.
* We believe these hostile actions could delay or impede your Board's
actions to maximize value and discourage potential bidders for
Cohoes.
TRUSTCO'S OFFER IS HIGHLY CONDITIONAL, AND WE BELIEVE IT IS ILLUSORY
* The offer is subject to at least 10 conditions, some of which cannot
be met.
* TrustCo took over 4 months to commence its hostile tender offer, and
TrustCo has said it will need at least 4 to 6 more months to complete
its offer.
LIMITED UPSIDE POTENTIAL FOR COHOES STOCKHOLDERS
* You will pay taxes but will have only a limited equity interest since
less than half of the consideration is TrustCo common stock.
* We believe TrustCo's common stock is overvalued compared to its
peers; it's trading at 400% of book value.
Please carefully read the attached materials which more fully explain
the recommendation of your board of directors that you reject TrustCo's tender
offer.
We appreciate your consideration and continued support. Please vote FOR
Cohoes' nominees for director and FOR Proposals 2 and 3 and do not tender any
shares to TrustCo. DISCARD any proxy you receive from TrustCo or from Ambanc
Holding Co., Inc.
Let us maximize value for all stockholders by allowing us to complete
the orderly marketing of Cohoes to ALL interested parties, not just TrustCo.
Very truly yours,
Harry L. Robinson
President and Chief Executive Officer
Cohoes Bancorp, Inc.
2
QUESTIONS AND ANSWERS
Q: DO I NEED TO RESPOND TO TRUSTCO'S OFFER?
A: No, you do not have to respond to TrustCo's offer. If you do not like
the price TrustCo is offering or if you want to wait until we complete
our marketing process, there is no need to do anything. However, even
if you have some interest in TrustCo's offer, you are not hurt by taking
your time to respond to TrustCo's offer. The offer must continue until
at least December 15, 2000. Given all of the conditions to the offer,
even TrustCo anticipates the deadline will be pushed back several more
months.
Q: DO I HAVE ANYTHING TO LOSE IF I DO NOT TENDER BUT TRUSTCO'S OFFER IS
SUCCESSFUL ANYWAY? WILL I GET LESS THAN STOCKHOLDERS WHO TENDER NOW?
A: No. In the highly unlikely event that TrustCo's offer were to close,
TrustCo has indicated that even stockholders who never tender will still
get paid in the subsequent merger the same amount as those who tender
now.
Q: WHAT IF I ALREADY TENDERED MY SHARES TO TRUSTCO?
A: You can withdraw your shares at any time before TrustCo's offer expires.
If you need any help with this, please call our representative in
connection with TrustCo's hostile offer, Regan & Associates, Inc., toll
free at 1-800-737-3426.
Q: DO ANY OF OUR DIRECTORS AND EXECUTIVE OFFICERS INTEND TO TENDER THEIR
SHARES TO TRUSTCO?
A: Absolutely not. They believe that completing our exploration of a sale
of Cohoes is in the best interest of all Cohoes' stockholders.
Furthermore, they currently believe that a better offer than TrustCo's
can be obtained, thus benefiting all Cohoes' stockholders. They also
believe that serious questions exist as to the real value of the TrustCo
offer.
Q: WHO CAN ANSWER MY QUESTIONS?
A: Please call Regan & Associates, Inc. toll free at 1-800-737-3426 with
any questions you have. They can also help you withdraw any shares that
you may have tendered to TrustCo.
3
RECOMMENDATION
TrustCo recently commenced a tender offer seeking to acquire your shares
of Cohoes common stock in exchange for cash in the amount of $10.80 per share
and a fractional share of TrustCo common stock with an approximate value of
$7.20. YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU REJECT
TRUSTCO'S OFFER BY NOT TENDERING YOUR SHARES. The TrustCo offer is subject to
a long list of conditions. We do not believe that all of these conditions
will ever be satisfied. We believe that TrustCo's true intention is to impede
and delay our previously announced orderly marketing process designed to
maximize value for ALL Cohoes stockholders. We expect to complete our
exploration of all strategic options, including a sale of Cohoes, before
TrustCo can ever hope to complete its tender offer.
None of our directors, executive officers, affiliates or subsidiaries
intends to tender a single share of Cohoes stock in TrustCo's hostile offer.
Nor do they plan to sell a single share as a result of the offer.
REASONS
We summarize below some of the analyses and other considerations taken
into account by us and our financial advisors, and the discussion includes all
material factors considered by the Board.
Not the Best Deal
Our Board has embarked on the process of thoroughly exploring Cohoes'
strategic options, including the sale of Cohoes to a larger financial
institution. We are fully committed to this process and believe it is the
best way to maximize value for ALL Cohoes stockholders. We think we can
obtain a better deal for you than TrustCo's. We have already signed
confidentiality agreements with several larger financial institutions that
have been active acquirors. We will carefully consider all offers that are
received and will treat all interested parties fairly and equally, including
TrustCo and Ambanc. Although TrustCo and Ambanc have refused to date to
execute confidentiality agreements, the same ones as signed by all the other
institutions, we have invited TrustCo and Ambanc to participate in the
process. We will review any proposals they wish to submit.
Not a Real Deal
Because of the highly conditional nature of TrustCo's tender offer, we
do not believe that the TrustCo offer represents a real deal. The TrustCo
offer is subject to 10 different conditions. We do not believe that all of
these conditions will ever be satisfied. We feel that TrustCo is asking you
to tender your shares to them even though there is, in our view, virtually no
chance that all of their conditions will ever be satisfied.
4
Some of the conditions to the TrustCo offer cannot be controlled by
Cohoes. For example, TrustCo has included as a condition that our stock
option agreement with Hudson River Bancorp, Inc. be terminated. Cohoes cannot
unilaterally terminate this agreement and Hudson River would have to agree to
terminate this agreement, which it has refused to do. We attempted to
negotiate the termination of the stock option agreement after our stockholders
did not approve the proposed Cohoes-Hudson River merger. While Hudson River
would not agree to such termination, we were able to substantially limit the
economic value of the stock option by amending it to have an economic cap of
$3.5 million. Without that cap, TrustCo's offer would have resulted in the
option having a value of almost $13.0 million rather than the $3.5 million as
now provided under the terms of the amended option agreement.
TrustCo's offer also contains certain conditions which are in the sole
control of your Board. For example, they have asked your Board to:
* make the supermajority vote provisions of our certificate of
incorporation inoperative to TrustCo;
* make Section 203 of the Delaware Corporation Law inapplicable to the
TrustCo offer; and
* enter into merger agreements with both TrustCo and TrustCo's
subsidiary bank.
Because your Board is committed to completing the exploration of all of
its strategic options, including a sale of Cohoes, it cannot agree to any of
these three conditions. We are actively pursuing a sale of Cohoes, and we
believe we can obtain a better deal for all of our stockholders than the one
proposed by TrustCo.
The highly conditional nature of TrustCo's offer and the inclusion of
several conditions that are very unlikely to be satisfied lead us to believe
that TrustCo is not interested in a real deal with us. We also feel that it
would be foolish for you to tender shares when there is, in our view, very
little chance that the TrustCo tender offer will ever be completed and while
we are involved in the marketing of Cohoes.
Wrong Currency
We also believe that the nature of part of the consideration being
offered, TrustCo common stock, is objectionable. Simply put, we believe that
TrustCo's common stock is overvalued.
TrustCo common stock currently trades at
* 400% of book value, and
* approximately 14.9 times the estimated earnings per share for 2001.
5
By comparison, Keefe, Bruyette & Woods analyzed a peer group of seven
banks located in upstate New York with assets between $750 million and $3.0
billion and determined that the stock of this peer group trades at:
* an average of approximately 200% of tangible book value, and
* an average of approximately 8.9 times the estimated earnings per
share for 2001.
Furthermore, while Cohoes stockholders have had a total annualized
return of over 29% from January 4, 1999 (the first day of trading) through
October 20, 2000, TrustCo's stockholders for the same period actually lost
money, experiencing a negative 2.1% annualized total return.
While the market price of TrustCo's common stock has declined by more
than 13% since December 31, 1998, we believe it is still overvalued. We feel
that TrustCo's common stock will continue to face downward pressure and that
there would be considerable downside risk in accepting TrustCo common stock as
the currency for any transaction at this time.
Other Factors
* INTEGRATION RISK - TrustCo has no real record of acquisitions. It
has completed only one material acquisition in the past ten years,
Home and City Savings Bank in 1991. It completed a very small
acquisition in August 2000, Landmark Financial Corporation ($26.4
million in assets).
* DETRIMENTAL EFFECTS ON COHOES' CUSTOMERS, COMMUNITIES AND EMPLOYEES -
TrustCo's pro forma financial statements reflect that it will attempt
to drastically reduce Cohoes current operating costs. Clearly they
expect to close at least several offices and reduce the number of
employees and benefits offered. Banking is still largely a customer
service business and such cost-cutting efforts often result in
customer attrition, deposit run-off and low morale among employees.
In addition to adversely affecting our customers, communities and
employees, this can adversely affect net income.
Your Board did not assign specific weights to the foregoing factors and
individual directors may have given different weights to different factors.
Throughout its deliberations, your Board received the advice of its legal and
financial advisors and other advisors who were retained to advise the Board in
connection with TrustCo's hostile offer.
ACTIONS IN RESPONSE TO TRUSTCO'S HOSTILE OFFER
Strategic Transactions
Your Board is committed to the exploration of our strategic options,
including a sale of Cohoes to a larger financial institution. After the
Cohoes-Hudson River merger was not
6
approved, the Board commenced an analysis of the various courses of action
available to it. First and foremost it sought to terminate the Cohoes-Hudson
River merger agreement and obtain the cancellation or amendment of the
reciprocal stock options. Second, the Board determined that it needed to
explore all its strategic options, including, in particular, the sale of
Cohoes to a larger financial institution. In that vein, we have executed
confidentiality agreements with several larger financial institutions which
have been active acquirors. We have also, as a part of this strategic review,
increased our quarterly cash dividend by 14% and determined to repurchase up
to approximately 12.5% of our stock (as long as such repurchases are not
detrimental to our marketing efforts).
Your Board of Directors duly considered TrustCo's offer in accordance
with its fiduciary duties and unanimously determined that this offer was not
in the best interest of Cohoes' stockholders. Because your Board believes
that TrustCo's offer has several other significant impediments and because
Cohoes is embarked on a process to maximize value for all stockholders, your
Board recommends that you reject TrustCo's offer by not tendering any of your
shares to TrustCo.
The stock option issued to Hudson River at the time we entered into our
merger agreement could possibly have the effect of discouraging offers to
acquire Cohoes for a period of up to 18 months after termination of the merger
agreement. The presence of this option, of course, did not preclude TrustCo
from making such an offer. Furthermore, our recent amendment to limit the
economic value of such option to $3.5 million substantially reduces any such
deterrent effect.
On October 25, 2000, TrustCo mailed definitive proxy solicitation
materials to our stockholders. These materials solicit proxies against the
election of Cohoes' nominees for director and the proposal to amend our stock
benefit plans and for TrustCo's nominees.
On November 1, 2000, TrustCo formally commenced its hostile exchange
offer for your Cohoes shares.
Background to Your Board's Recommendation
Your Board duly considered TrustCo's original offer of $16.00 per share
after we received it on June 8, 2000 on a confidential basis. On June 22,
2000, your Board met to duly consider TrustCo's offer in accordance with its
fiduciary duties and unanimously determined that this offer was not in the
best interests of Cohoes' stockholders. We informed TrustCo on June 23, 2000
that there was no basis for further discussions with respect to its initial
proposal. On the following Monday, June 26, 2000, TrustCo publicly announced
that it intended to make a hostile offer for your shares. On July 11, 2000,
TrustCo filed a registration statement on Form S-4 with the SEC with respect
to the TrustCo shares to be offered in exchange for shares of Cohoes.
TrustCo's registration statement included a preliminary prospectus describing
certain material terms of TrustCo's tender offer.
7
On August 17, 2000, our stockholders did not approve the Cohoes-Hudson
River merger. Subsequently, on August 30, 2000, we received a letter from
TrustCo proposing to revise their offer to $18.00 per share in TrustCo common
stock or a mixture of stock and cash and requesting a meeting. We agreed to
such meeting and arrived at the meeting only to be told by TrustCo's chairman
that he would not proceed with discussions in the absence of our chairman. On
September 7, 2000, we received a second letter reiterating TrustCo's offer.
On September 15, 2000, we requested to meet with TrustCo to discuss the latest
letter, which we did on September 20, 2000. Immediately after such meeting,
we received a letter from TrustCo withdrawing the offer.
On September 28, 2000, we announced the mutual termination of the
Cohoes-Hudson River merger agreement and the amendment of the reciprocal stock
options to limit the economic value realizable thereon to $3.5 million. On
the same day, we announced that our Board of Directors was committed to
exploring all of our strategic options, including a sale of Cohoes to a larger
financial institution. On October 19, 2000, in furtherance of our analysis of
our strategic options, we announced a 14% increase in our quarterly cash
dividend and the receipt of regulatory approval to repurchase approximately
12.5% of our stock.
On October 3, 2000, TrustCo filed an amendment to its registration
statement to reflect the revised offer pursuant to which they would offer you
$18.00 in a mixture of 60% cash and 40% TrustCo common stock. On October 18,
2000, TrustCo filed a further amendment to their registration statement to
clarify certain matters concerning their offer, including the fact that the
entire amount you would receive could be taxable, even the portion consisting
of TrustCo common stock.
On October 19, 2000, your Board met again to consider TrustCo's current
offer in light of the new materials TrustCo filed with the SEC. At that
meeting, your board carefully considered the information published by TrustCo
and received the advice of Cohoes' management, of Keefe, Bruyette & Woods,
Cohoes' financial advisors, and of legal counsel. After careful consideration,
your Board unanimously:
* determined that TrustCo's offer is not in the best interests of
Cohoes and its stockholders in view of our ongoing marketing efforts,
and
* recommended that you reject TrustCo's offer by not tendering your
shares.
The reasons for our conclusions are outlined in this document.
8
ANTI-TAKEOVER CONSIDERATIONS
Delaware Takeover Statute
Section 203 of the Delaware General Corporation Law prohibits business
combinations, including mergers, sales and leases of assets, issuances of
securities and similar transactions by a corporation or a subsidiary, with an
interested stockholder, which is someone who beneficially owns 15% or more of
a corporation's voting stock, within three years after the person or entity
becomes an interested stockholder, unless:
* the transaction that caused the person to become an interested
stockholder was approved by the board of directors of the target
prior to the transaction,
* after the completion of the transaction in which the person becomes
an interested stockholder, the interested stockholder holds at least
85% of the voting stock of the corporation not including (a) shares
held by persons who are both officers and directors of the issuing
corporation and (b) shares held by specified employee benefit plans,
* after the person becomes an interested stockholder, the business
combination is approved by the board of directors and holders of at
least 66 2/3% of the outstanding voting stock, excluding shares held
by the interested stockholder, or
* the transaction is one of specified business combinations that are
proposed after the corporation had received other acquisition
proposals and that are approved or not opposed by a majority of
certain continuing members of the board of directors, as specified in
the Delaware General Corporation Law.
This summary of Section 203 of the Delaware General Corporation Law does
not purport to be complete and is qualified in all respects by reference to
the provisions of Section 203 of the Delaware General Corporation Law.
Anti-takeover Provisions in Cohoes' Certificate of Incorporation and Bylaws
Cohoes' certificate of incorporation and bylaws contain several
provisions that may limit the ability to acquire control of Cohoes without
negotiations with Cohoes' Board. These provisions include:
* authorized but unissued common and preferred stock,
* the division of Cohoes' Board of Directors into three staggered
classes,
* no cumulative voting for election of Cohoes' directors,
9
* the Board's power to determine the size of the Board and to fill
vacancies,
* the need for approval of the Board of Directors to amend the
certificate of incorporation,
* the need for a supermajority shareholder vote to remove directors for
cause and to amend the bylaws and important provisions of the
certificate of incorporation,
* the need for supermajority shareholder approval before Cohoes can
purchase securities from an "interested shareholder" (generally, a
beneficial owner of 10% or more of the voting stock), and
* the ability of only the Board, not the shareholders, to call special
meetings.
These provisions are discussed at greater length in our July 3rd proxy
statement/prospectus.
Stock Option Agreement
In connection with the execution of the Cohoes-Hudson merger agreement,
we and Hudson River each granted the other a conditioned option to purchase
up to 19.9% of the outstanding shares of its common stock at a fixed price
equal to the closing sales price of the common stock of the respective parties
on April 24, 2000. These options were intended to make it more likely that
the Cohoes-Hudson River merger would be completed on the agreed terms and to
compensate a party for its efforts and costs in case the merger was not
completed due to a third party proposal for a business combination with the
other party. In view of the termination of the Cohoes-Hudson River merger
agreement, we sought to have the options cancelled. Hudson River was
unwilling to do so but did agree to amend the options to cap the economic
value of the options at $3.5 million. Although, even as amended, the option
may possibly discourage proposals to acquire Cohoes, the capping of the
economic value has substantially reduced any such deterrent effect. As a
result of the public announcement of the TrustCo proposals received by Cohoes
and Hudson River, an initial triggering event as defined in the stock option
agreements has occurred under each of the agreements. However, neither option
can be exercised until a subsequent triggering event as defined in the
agreements also occurs. If TrustCo is successful in its tender offer, a
subsequent triggering event will have occurred by virtue of TrustCo's
acquisition of more than 25% of the shares of our common stock. In such
event, Hudson River could exercise the option, but the value it could receive
would not exceed $3.5 million rather, as compared to the almost $13.0 million
it could have realized had the option not been amended.
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INFORMATION ABOUT COHOES, ITS AFFILIATES AND ITS ADVISORS
Cohoes and Cohoes Common Stock
Cohoes Bancorp, Inc. is a Delaware corporation. The executive offices of
Cohoes are located at 75 Remsen Street, Cohoes New York 12047. The telephone
number of Cohoes at this location is (518) 233-6500.
TrustCo's exchange offer relates to the common stock, par value $.01 per
share, of Cohoes. As of November 1, 2000, 7,912,705 shares of Cohoes common
stock were outstanding.
Cohoes is the subject company to TrustCo's exchange offer and we have
filed a Schedule 14D-9 with the SEC in response. The Schedule 14D-9 contains
or incorporates by reference exhibits with additional information. You may
obtain a free copy of the document at the SEC's Internet web site at
www.sec.gov. This document may also be obtained free of charge from us by
calling our representative, Regan & Associates, Inc., at 1-800-737-3426.
Cohoes will bear the cost of any solicitations of, or communications or
recommendations to, its shareholders regarding the TrustCo exchange offer. If
necessary, in soliciting or making a recommendation with respect to the
TrustCo exchange offer to its shareholders, Cohoes may use members of the
Board as well as several of its executive officers, who may contact you either
personally or by telephone, facsimile or letter and who will not be specially
compensated.
Cohoes will also request that banks, brokers and other record holders
send solicitation or recommendation material, including this document, to the
beneficial owners of Cohoes common stock, if necessary. Cohoes will reimburse
the record holders for their reasonable expenses in taking those actions in
the ordinary course of their business.
Cohoes' Advisors
KEEFE, BRUYETTE & WOODS. On April 7, 2000, Cohoes retained Keefe,
Bruyette & Woods as its financial advisor in connection with the proposed
merger with Hudson River. Cohoes agreed to pay Keefe, Bruyette & Woods a fee
of approximately $250,000 for services rendered in connection with advising
and issuing a fairness opinion regarding the Cohoes-Hudson River merger.
Keefe, Bruyette & Woods, Inc. received $100,000 of such fee. The remainder
of the fee was not paid due to the termination of the Cohoes-Hudson River
merger agreement.
In late July 2000, Cohoes and Keefe, Bruyette & Woods agreed to enter
into an additional agreement supplementing Keefe's previous engagement as
Cohoes' financial advisor with respect to the TrustCo offer and any other
merger or acquisition of Cohoes. In view of the failure to obtain stockholder
approval of the Cohoes-Hudson River merger and the subsequent determination by
the Board to explore Cohoes' strategic options, Cohoes and Keefe, Bruyette &
Woods executed a new agreement superseding the agreement reached in late July
2000. Under
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the new agreement entered into on September 12, 2000, Keefe, Bruyette & Woods
was retained to provide financial advisory and investment banking services to
Cohoes in connection with a possible merger transaction involving Cohoes.
During the course of this engagement, Keefe, Bruyette & Woods and its
representatives may participate in activities or conduct analyses designed to
assist Cohoes in soliciting or making recommendations to Cohoes' stockholders.
Under the terms of this agreement, Cohoes agreed to pay Keefe, Bruyette &
Woods a fee equal to 1.0% of the market value of the aggregate consideration
offered in a transaction less $350,000. Such fee excludes from the
calculation of the amount of consideration received by stockholders any
amounts paid pursuant to the stock option granted to Hudson River. In
addition, Cohoes agreed to pay Keefe, Bruyette & Woods a fee of $250,000,
which fee will be paid on November 1, 2000.
Cohoes has also agreed to indemnify Keefe, Bruyette & Woods and related
persons and entities against various liabilities, including liabilities under
federal securities laws, arising out of Keefe, Bruyette & Woods' engagement
and to reimburse Keefe, Bruyette & Woods for its reasonable out-of-pocket
expenses, including reasonable fees and expenses of its legal counsel.
In the ordinary course of its business, Keefe, Bruyette & Woods and its
affiliates may actively trade the equity securities of Cohoes, Hudson River
and TrustCo and their affiliates for their own accounts and for the accounts
of customers and, accordingly, may at any time hold a long or short position
in these securities.
REGAN & ASSOCIATES, INC. Cohoes also has engaged Regan & Associates,
Inc. to assist in soliciting proxies in connection with Cohoes' Annual Meeting
of Stockholders, and has agreed to pay them $30,000 plus expenses for these
services. Cohoes has continued to retain Regan & Associates to assist Cohoes
in connection with its communications with stockholders with respect to
TrustCo's tender offer.
THE ABERNATHY MACGREGOR GROUP, INC. In September 2000, Cohoes retained
The Abernathy MacGregor Group, Inc., a public relations firm, in connection
with public and press relations and presentations regarding Cohoes'
exploration of its strategic options as well as the annual meeting of
stockholders. In the context of the TrustCo tender offer, Abernathy MacGregor
will assist Cohoes with its communications to stockholders and the public.
Abernathy MacGregor receives compensation based on the time it has spent on
the project and is reimbursed for reasonable expenses. As part of the
retention arrangement, Cohoes pays Abernathy MacGregor a minimum retainer of
$5,000 per month, all of which is applied to the hourly fees charged for their
services. Upon execution of the engagement, Cohoes paid Abernathy MacGregor a
non-refundable fee of $50,000 against which the monthly retainer is applied.
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OTHER ARRANGEMENTS, AGREEMENTS OR CONFLICTS OF INTEREST
Except as set forth below, to the best knowledge of Cohoes, there are
no material agreements, arrangements or understandings and no actual or
potential conflicts of interest between Cohoes or its affiliates and:
* Cohoes' executive officers, directors or affiliates, or
* TrustCo or TrustCo's executive officers, directors or affiliates.
Arrangements between Cohoes and its affiliates and its executive
officers, directors or affiliates are described under the headings "Directors'
Compensation," "Executive Officer Compensation," "Employment Contracts,"
"Stock Options," "Benefit Restoration Plan" and "Transactions with Directors
and Officers," in Cohoes' definitive proxy statement dated October 23, 2000,
and distributed to Cohoes' stockholders in connection with its 2000 Annual
Meeting of Stockholders. In addition, the section "Proposal to Amend the 1999
Stock Option and Incentive Plan and the 1999 Recognition and Retention Plan"
in such proxy statement describes certain interests of the officers and
directors in the amendments to Cohoes' 1999 Stock Option and Incentive Plan
and 1999 Recognition and Retention Plan. Copies of the relevant portions of
the October 23, 2000 proxy statement are included as exhibits to the Schedule
14D-9 of Cohoes filed with the SEC.
There have been no transactions in Cohoes' common stock by its executive
officers, directors, affiliates or subsidiaries in the 60 days before the date
of this document. Cohoes also has not engaged in any transaction in its own
common stock in the 60 days before the date of this document.
INFORMATION ABOUT TRUSTCO
TrustCo Bank Corp NY is a New York corporation. TrustCo has commenced an
offer to exchange each outstanding share of Cohoes common stock for $10.80 in
cash and a fractional share of TrustCo common stock, par value $1.00 per
share, with a value of $7.20 based upon the average closing price of TrustCo
common stock on the Nasdaq for the 20-day period ending five days prior to the
closing date of the tender offer.
The Schedule TO filed on November 1, 2000 by TrustCo indicates that
TrustCo's principal executive offices are located at 320 State Street,
Schenectady, New York 12305 and that the telephone number of TrustCo at this
location is (518) 377-3311.
FORWARD-LOOKING STATEMENTS
This document contains a number of forward-looking statements regarding
the financial condition, results of operations and business of Cohoes and
TrustCo. These statements may be made directly in this document or may be
incorporated in this document by reference to other
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documents. These statements may also include references to periods following
the completion of TrustCo's offer. You can find many of these statements by
looking for words such as "believes," "expects," "anticipates," "estimates,"
"potential" or similar expressions. These forward-looking statements involve
substantial risks and uncertainties. Some of the factors that may cause actual
results to differ materially from those contemplated by the forward-looking
statements include, but are not limited to, the following possibilities:
* required regulatory approvals for TrustCo's offer may be obtained
more quickly than we expect,
* market reaction to a combined Cohoes-TrustCo may be different than we
expect,
* the timing and occurrence or non-occurrence of events may be subject
to circumstances beyond our control,
* there may be increases in competitive pressure among financial
institutions or from non-financial institutions,
* changes in the interest rate environment may reduce interest margins
or may adversely affect mortgage originations,
* changes in deposit flows, loan demand or real estate values may
adversely affect a company's business,
* changes in accounting principles, policies or guidelines may cause
our financial condition to be perceived differently,
* general economic conditions, either nationally or in some or all of
the states in which Cohoes or a combined Cohoes-TrustCo would be
doing business, or conditions in securities markets, the banking
industry or the mortgage banking industry, may be less favorable than
we currently anticipate,
* legislation or regulatory changes may adversely affect our
businesses, and
* technological changes may be more difficult or expensive than
anticipated.
All subsequent written and oral forward-looking statements concerning
the exploration of our strategic options, TrustCo's offer or other matters
addressed in this document and attributable to Cohoes or any person acting on
its behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to in this section. Cohoes does not undertake
any obligation to release publicly any revisions to such forward-looking
statements to reflect events or circumstances after the date of this document
or to reflect the occurrence of unanticipated events.
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