CUSIP 201647104 13D
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
Commercial Federal Corporation
(Name of Issuer)
Common Stock, par value $0.01
(Title of Class of Securities)
201647104
(CUSIP Number)
Raymond Garea
Robert Friedman
Peter A. Langerman
Franklin Mutual Advisers, LLC
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
(973) 912-2174
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
October 6, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the
subject of this Schedule 13D, and is filing this schedule
because of Rule 13d-l(e) 13d-1(f) or 13d-1(g) or (4), check
the following box [ ].
*The remainder of this cover page shall be filled out
for a reporting person's initial filing on this form with
respect to the subject class of securities, and for any
subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover
page shall not be deemed to be "filed" for the purpose of
Section 18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act
(however, see the Notes).
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Franklin Mutual Advisers, LLC
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(A)[ ]
(B)[X]
3. SEC USE ONLY
4. SOURCE OF FUNDS
See Item 3
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
7. SOLE VOTING POWER
4,663,552 (See Item 5)
8. SHARED VOTING POWER
None (See Item 5)
9. SOLE DISPOSITIVE POWER
4,663,552 (See Item 5)
10. SHARED DISPOSITIVE POWER
None (See Item 5)
11. AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,663,552 (See Item 5)
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
7.7%
14. TYPE OF REPORTING PERSON
IA
This Amendment No. 3 relates to the Schedule 13D
originally filed on behalf of Franklin Mutual Advisers, LLC
("Franklin Mutual") with the Securities and Exchange
Commission ("SEC") on August 3, 1999 (as amended September
9, 1999 and September 28, 1999, the "Schedule 13D"). The
text of Items 4 and 7 of the Schedule 13D is hereby
supplemented and amended as follows:
Item 4. Purpose of the Transaction
As previously disclosed in Amendment No. 1 to the
Schedule 13D, by letter dated September 9, 1999, Franklin
Mutual notified Commercial Federal Corporation ("CFC" or the
"Company") of Franklin Mutual's intention to nominate two
individuals for election as directors at the Company's 1999
annual meeting of stockholders. Franklin Mutual's nominees
are J. Thomas Burcham and George R. Zoffinger and its
alternate nominee is Matthew P. Wagner. Franklin Mutual has
filed proxy materials with the Securities and Exchange
Commission (the "SEC") and intends to solicit proxies from
the Company's stockholders for the election of its nominees.
By letter dated September 29, 1999, which was not
received by Franklin Mutual until October 4, 1999, the
Company notified Franklin Mutual that it intended to declare
the nominations of Mr. Burcham and Mr. Wagner defective
based on the Company's interpretation of the management
interlocks regulations of the Office of Thrift Supervision
(the "OTS"). A copy of the Company's September 29, 1999
letter is attached as Exhibit A hereto.
After receipt of Franklin Mutual's notice of
nominations, the CFC Board, on September 28, 1999, adopted
an amendment to the CFC By-laws which establishes new
eligibility requirements for nominees and directors and
would preclude Mr. Burcham from serving as a director even
if he is otherwise qualified to serve under the OTS
regulations and the Company's by-laws as in effect prior to
the amendment. The CFC Board's adoption of the amendment
was not disclosed publicly until the Company filed a Form 8-
K with the SEC on October 5, 1999.
By letter dated October 6, 1999, Franklin Mutual
notified the Company that, contrary to the Company's
assertions, both Mr. Burcham and Mr. Wagner are eligible to
be nominated and to serve as directors under the OTS
regulations and the Company's by-laws as in effect prior to
the amendment. Franklin Mutual also notified CFC that the
by-law amendment is an impermissible attempt to
disenfranchise stockholders. Franklin Mutual called for the
CFC Board to rescind the by-law amendment immediately, and
stated that it would pursue all appropriate action to
enforce its rights as a shareholder if the amendment is not
rescinded. A copy of Franklin Mutual's October 4, 1999
letter is attached hereto as Exhibit B.
Item 7. Material to Be Filed as Exhibits
Exhibit A.
Letter from Commercial Federal Corporation to Franklin
Mutual Advisers, LLC, dated September 29, 1999
Exhibit B.
Letter from Franklin Mutual Advisers, LLC to Commercial
Federal Corporation, dated October 6, 1999
Signature.
After reasonable 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.
Date: October 7, 1999
FRANKLIN MUTUAL ADVISERS, LLC
By: Franklin/Templeton Distributors, Inc.
Its Managing Member
/s/Leslie M. Kratter
LESLIE M. KRATTER
Secretary
Exhibit A
[COMMERCIAL FEDERAL LETTERHEAD]
September 29, 1999
Mr. Bradley Takahashi
Assistant Vice President
Franklin Mutual Advisers LLC
51 John F. Kennedy Parkway
Short Hills, NJ 02078
Dear Mr. Takahashi:
We have reviewed your letter dated September 8, 1999
and seek further clarification concerning your assertion
that the nominees and alternate referenced therein "meet all
of the federal banking laws applicable to CFC". As you may
be aware, Section 1 of Article II of our bylaws specifically
provides that "[a]ll persons nominated for director, whether
by the Nominating Committee or otherwise, shall meet all
requirements imposed by the Federal Home Loan Bank Board
[now the Office of Thrift Supervision]. . . ." Based upon
the information which you have provided, it is clear that
both Messrs. Burcham (who we understand to be the
controlling shareholder and director of Missouri Bank and
Trust Company, a federally insured depository institution
operating in Kansas City, Missouri in direct competition
with Commercial Federal) and Wagner (who we understand to be
the CEO of Western Bancorp) are ineligible to be nominated
as directors of Commercial Federal Corporation since they
are ineligible to serve as directors under the management
interlocks regulations of the OTS set forth at 12 C.F.R.
563f as currently in effect. Our bylaws are clear that
all persons must meet such eligibility requirements when
nominated (which nomination must occur by September 17, 1999
to be timely under the notice requirements set forth in
Section 14 of Article I of our Bylaws).
Accordingly, we hereby notify you that it is our
intention to declare the nomination of Mr. Burcham, and
Mr. Wagner as his alternate, defective.
For your future reference, we also hereby give you
notice that we are amending our bylaws in light of the
pending amendments to 12 C.F.R. 563f which will become
effective January 1, 2000 to provide that any person who is
a controlling person or management official of a federally
insured depository organization (other than affiliates of
the Corporation) that operates branches in any market in
which the Corporation operates branches would remain
ineligible to serve as a director of the Corporation after
the proposed changes to the interlocks regulations become
effective. The effect of such amendment would simply be to
continue in place the protections against competitor entity
representation on our board that currently exist. Based
upon our recent experience with a director serving on our
board who also had a controlling interest in a competing
depository organization operating in our markets, our board
has concluded that the director's conflicts of interest and
the legal exposure that the Corporation faces in such a
situation make it necessary and appropriate to continue to
prohibit such interlocking service. Because Messrs. Burcham
and Wagner are ineligible to seek election for the reason
stated above, and to our knowledge Mr. Zoffinger is not a
control person or management official of any depository
institution operating in our various markets, we do not
believe that this amendment will have any impact on this
year's election of directors.
Finally, we note that there is nothing in our by-laws,
nor are we aware of any applicable statute, rule, or
regulation, that provides for the designation of a so-called
"alternate nominee." Please let us know the basis for such
designation of Mr. Wagner.
Please provide us with any information and analyses you
believe are appropriate with respect to the foregoing
matters and please let us know if we are incorrect as to the
current status of Mr. Burcham with respect to Missouri Bank
and Trust Company or the current status of Mr. Wagner with
respect to Western Bancorp. Finally, please confirm that
Mr. Zoffinger is not a management official of any depository
organization operating in our various markets.
Sincerely,
/s/ Gary L. Matter
Gary L. Matter
Senior Vice President,
Controller and Secretary
Exhibit B
[FMA Letterhead]
BY FACSIMILE AND
OVERNIGHT COURIER
October 6, 1999
Mr. Gary L. Matter
Corporate Secretary
Commercial Federal Corporation
P.O. Box 1103
2120 South 72nd Street
Omaha, NE 68101
Dear Mr. Matter:
We have reviewed your letter dated September 29, 1999,
which we did not receive until October 4, 1999. We also
reviewed the Form 8-K filed late yesterday in which
Commercial Federal Corporation ("CFC" or the "Company")
announced that it had amended its bylaws. As the largest
shareholder of CFC, we are deeply concerned that CFC is
attempting to deny its shareholders the right to decide
freely between competing slates of nominees for election to
the CFC Board. We are a long-time stockholder of the Company
and are appalled at the Company's efforts to disregard our
nominations.
As you know, we delivered our notice of nominations to
the Company on September 9, 1999, well in advance of the
September 17, 1999 deadline, and it is only now (25 days
later) that the Company is responding to our filing. This
delay is surprising given that the Company's response is in
essence an attempt to disenfranchise its largest
stockholder. Nevertheless, we are happy to respond to your
request for "further clarification" regarding our nominees.
As we already stated in our September 9, 1999 notice, "our
nominees and alternate meet all of the requirements of the
federal banking laws applicable to CFC."
You have questioned the qualifications of our nominee,
J. Thomas Burcham. We selected Mr. Burcham, among other
reasons, because he is a significant stockholder of the
Company and has particular familiarity with CFC and its
business. Mr. Burcham is a paid independent consultant to
CFC and was the Chairman of First National Bank Shares, Ltd.
which was acquired by CFC in 1998. Mr. Burcham is also very
familiar with the banking business in the Midwest. He is
the former Chairman and Chief Executive Officer of Missouri
Bank and Trust Company ("MB&T"), a well-run community bank
whose only office is in Kansas City, Missouri, and its
parent holding company, MBT Bancshares, Inc. MB&T had total
deposits of under $76 million as of June 30, 1999. Mr.
Burcham resigned as Chairman and CEO of these companies on
September 1, 1999, well before we filed our notice of
nominations with the Company.
Mr. Burcham remains the majority stockholder of MBT
Bancshares. Despite your assertions, this fact does not
disqualify Mr. Burcham from being nominated or serving as a
director of CFC under the management interlocks regulations
of the Office of Thrift Supervision (the "OTS"). The OTS,
which is the successor to the Federal Home Loan Bank Board
and CFC's primary regulator, has adopted amendments to its
management interlocks regulations. The revised regulations
take effect on January 1, 2000, but the OTS, along with each
of the other federal banking agencies, has stated that any
person subject to the regulations may comply with the
amended regulations prior their effective date. The amended
regulations provide a self-executing exemption for
interlocks where the depository organizations (and their
depository institution affiliates) hold, in the aggregate,
no more than 20% of the deposits in the relevant markets
where each have offices. In view of the relatively small
market share of CFC, and the miniscule marketshare of MB&T,
this exemption avoids any issue under the OTS management
interlock regulations. We find it appalling that CFC should
raise this issue to prevent its largest stockholder from
exercising its rightful voting power. We urge the Company
to do the only right thing and confirm to us immediately in
writing that the Company will seat Mr. Burcham on the Board
if he is duly elected at the upcoming annual meeting and
fulfill its duties under the OTS regulations. To do
otherwise would have the effect of disregarding the
shareholders' due election of a director.
The Company is also raising questions regarding our
alternate nominee, Matthew P. Wagner. We selected Mr.
Wagner as an alternate nominee, among other reasons, because
he is a seasoned banking executive who, like Mr. Burcham, is
familiar with the banking business in the Midwest. Mr.
Wagner is currently the President, Chief Executive Officer
and a director of Western Bancorp, a large California bank
holding company. As disclosed in our preliminary proxy
statement filed with the Securities and Exchange Commission,
Mr. Wagner will resign from his positions at Western Bancorp
if called to serve as a director of CFC. Section 1 of
Article II of the CFC bylaws provides that "all persons
nominated for director . . . shall meet all requirements
imposed by the Federal Home Loan Bank Board." Contrary to
your assertion, the bylaws say nothing about when the
requirements must be met, and the only reasonable
interpretation (which is the interpretation applied by the
OTS) is that the requirements must be met when the director
takes office.
As previously stated in our notice of nominations and
in our preliminary proxy statement, at the annual meeting we
intend to nominate Mr. Wagner to serve as a director only if
either Mr. Burcham or Mr. Zoffinger is unable to serve or is
otherwise unavailable for election. Other than the advance
notice requirements of Section 14 of Article I and the
qualification requirements of Section 1 of Article II of the
CFC Bylaws, we are not aware of any other requirement that
must be satisfied to nominate Mr. Wagner under the
circumstances described in our notice of nominations and
preliminary proxy statement. Therefore, if either Mr.
Burcham or Mr. Zoffinger is unable to serve or is otherwise
unavailable we fully intend to nominate Mr. Wagner for
election as a director at the annual meeting. You will
recall that as recently as 1995, in its definitive proxy
statement for the CFC 1995 annual meeting CAI Corporation
clearly stated its intention to nominate an alternate
director if either of its two nominees was unable to serve
or is otherwise unavailable for election. As you
undoubtedly know, it was at the 1995 annual meeting that the
Company's stockholders passed a resolution calling for the
sale of the Company and elected two directors who were
committed to selling the Company to maximize stockholder
value. However, even in the face of this clear mandate, the
CFC Board resisted a sale and instead adopted a misguided
acquisition strategy which has significantly decreased the
value of CFC's common stock and diluted the interests of
stockholders.
Pursuant to your request, we confirm that, to our
knowledge, Mr. Zoffinger is not a "management official"
within the meaning of the applicable OTS regulations of any
depository organization operating in what we believe to be
CFC's markets.
The CFC Board's adoption of an amendment to the
Company's bylaws, which occurred on September 28, 1999 but
was not disclosed publicly until late yesterday, is another
desperate and impermissible attempt to block our right as
the largest shareholder of CFC to present an alternative
slate of nominees at this year's annual meeting. By
attempting to impose new requirements for directors after we
had notified the Company of our intention to solicit proxies
in opposition to management, the Board is no longer (if it
ever was) acting in the best interest of shareholders. The
amendment has the effect of preventing a person from sitting
on the Board even when he would be qualified under the
federal banking laws and the Company's bylaws at the time
notice of his nomination was provided to the Company. We
are surprised that the Board finds it necessary to adopt an
amendment to its bylaws to address a situation that the
federal banking regulators have already addressed and found
permissible. Clearly, there is no justification for a
board's adoption of a bylaw amendment which has the effect
of impeding proper exercise of stockholder voting power
especially when the company is on notice of a contested
election of directors. Therefore, unless the Board
immediately rescinds the amendment, we will take all
appropriate action to vigorously enforce our rights as a
shareholder in light of the Board's unlawful attempt to
disenfranchise us.
Despite the Company's attempts to deter its largest
stockholder, we continue to believe that election of our
nominees to the CFC Board and the eventual sale of the
Company is the best means for CFC stockholders to maximize
the value of their investment. Therefore, we will be
proceeding in earnest with the solicitation of proxies in
support of our nominees and fully intend to nominate Messrs.
Burcham and Zoffinger for election to the board of directors
at the annual meeting. If either Mr. Burcham or Mr.
Zoffinger is unable or otherwise unavailable to serve as a
director, we also intend to nominate Mr. Wagner for election
to the Board at the annual meeting.
Very truly yours,
Raymond Garea
Senior Vice President
cc: Board of Directors
Commercial Federal Corporation
