The trustees of the Otto Bremer Trust, the 86 percent majority shareholder of Bremer Financial Corporation, filed amended counterclaims against BFC and seven of its directors in the ongoing Bremer Bank saga.
The three OBT trustees originally announced their intention to sell St. Paul, Minn.-based Bremer Bank in October 2019, citing its philanthropic mandate. The move put the three trustees — Daniel Reardon, Brian Lipschults and Charlotte Johnson — immediately at odds with the other seven, non-OBT board members of Bremer Financial: Jeanne H. Crain, Ronald James, Mary Brainerd, Glenn D. McCoy, Kevin A. Rhein, Wendy Schoppert, and Charles B. Westling.
The $12 billion holding company responded with a lawsuit against the OBT when it purportedly transferred 37 percent of the voting stock to out-of-state hedge funds, calling the move “an attempt to seize control,” from the company’s employee shareholders.
The trust’s counterclaim on Dec. 9 said that the sale is “forced by unforeseen circumstances” and that Bremer Financial didn’t have the legal right to reject its decision to sell the company. “When Mr. Bremer created the trust, he left no room for the BFC board to second-guess this decision by the OBT trustees.”
The trust was founded in 1944 by Otto Bremer, who included a provision in the trust instrument that directs the trustees to retain all Bremer shares until it becomes “necessary or proper” to sell them due to “unforeseen circumstances.”
“The trust instrument, to which BFC is not a party, makes clear that the ‘trustee’s opinion’ governs the issue of ‘unforeseen circumstances’ and ‘necessary and proper,’” the filing said.
The 16 employee-shareholders of BFC filed a complaint in January against the three OBT trustees. Minnesota’s Attorney General Keith Ellison said he would investigate the circumstances of OBT’s proposed sale of the $12 billion bank.
In the amended counterclaims filed in May, the trust said recently uncovered documents show that since at least 1988, BFC has recognized OBT’s right to consider selling its BFC stock in support of the trust’s philanthropic work. Efforts by Bremer “to obstruct OBT from exploring BFC’s strategic options were entirely improper.”
“It’s telling that BFC’s reaction to these documents is to do everything possible – even middle-of-the-night legal maneuvering – to stop these documents from seeing the light of day,” a statement issued by the trust said. “It is clear they recognize – as we do – that these documents are devastating to their case and to the entire basis for their claims.”
Bremer fired back against the trust’s claims in an emailed statement.
“The trustees’ allegations are false and legally improper, and cannot change the pattern of self-interested transactions at issue in the lawsuit,” Bremer Financial said. “It is disappointing that the trustees now appear to be relying on the pandemic to support their baseless claims, and it is unfortunate that they continue to rely on intimidation to further their arguments. Bremer Bank was not for sale last October, and it is not for sale today.”