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Lawsuit filing latest salvo in Bremer power struggle

ST. PAUL — The board of Bremer Financial filed a lawsuit Tuesday that alleges a hostile takeover attempt by the Otto Bremer Trust.

In the filing in Ramsey County, Bremer said it was protecting its employees, shareholders and customers, and other local stakeholders from the “hostile takeover” attempt by Otto Bremer Trust.

Bremer Financial is the fourth-largest bank in Minnesota with a branch located on East College Avenue.

Otto Bremer Trust announced on Oct. 28 its purported transfer of approximately 37 percent of Bremer Financial’s voting stock to 19 out-of-state hedge funds, with the stated goal of replacing the Bremer Financial board of directors and putting Bremer up for sale.

“This attempt to seize control of the company from its employee shareholders and deliver it to OBT and its associates violated OBT’s organizational documents and applicable law,” the Bremer Financial said.

“In filing this lawsuit, the board is carrying out its fiduciary obligation to ensure that any transfer of Bremer Financial shares is valid and consistent with OBT’s and Bremer Financial’s organizational documents, which reflect Otto Bremer’s vision to harness the power of banking to drive economic growth and to support our communities,” said Ronald James, chairman of the board of Bremer Financial.

Otto Bremer Trust responded to the lawsuit on Tueday with a statement on its website.

“It’s disappointing that BFC has chosen a path of obstruction and conflict in this matter. In doing so, they are acting in a manner that seems certain to hurt the bank and its employees, to waste the resources of the company, and to hurt the people Otto Bremer dedicated his life and fortune to helping,” the statement said.

“The allegations in the lawsuit are false and without merit. We’re confident the courts will quickly see this tactic for what it is: an ill-founded attempt by conflicted management and directors to deprive all shareholders of the value of their stock and to deny employees and communities of any legitimate exploration of their opportunities.”

The lawsuit seeks a judgment declaring the purported transfers invalid and enjoining the OBT trustees from transferring Bremer Financial shares or engaging in discussions with potential acquirors of the Company without express authorization from the Bremer Financial board.

It also declares that the OBT trustees breached their fiduciary duties as directors of Bremer Financial by, among other things, sharing confidential Bremer Financial information with potential acquirors without authorization.

The lawsuit also asserts that the OBT trustees’ bad faith actions and contravention of board directives constitute shareholder oppression. 

“We are extremely disappointed that OBT’s reckless unilateral actions have undermined a partnership that has delivered for the people of Minnesota, North Dakota and Wisconsin for more than 75 years,” said Jeanne Crain, Bremer Financial president and CEO and a member of the board.

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