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Vining Sparks tapped by creditors to shop Colorado National Bank

The official committee of unsecured creditors of Colorado National Bancorp is seeking to retain Vining Sparks IBG LP to market the stock of Colorado National Bank for sale.

The application to employ the Austin, Texas-based advisory firm follows the creditors' objection to a Colorado National Bancorp motion to approve the process by which the company has proposed to sell the bank's stock to a group led by Marks Moskvins, the founder and CEO of SIA Transact Pro, a Latvia-based merchant acquirer and credit card processing company.

A Dec. 7 hearing on the Colorado National Bancorp motion has been continued until January 2018. In the meantime, the U.S. Bankruptcy Court for the District of Colorado provided the committee the opportunity to file a motion to appoint a financial adviser.

According to a letter signed by Vining Sparks Senior Vice President Thomas Mecredy, the firm would provide certain advisory services in connection with a possible business combination, including a merger, sale or reorganization, involving Colorado National Bank. The firm would be tasked with soliciting the bank's stock to potential acquirers, advising the committee in the negotiation of the financial terms of a possible transaction and to render a fairness opinion regarding such a deal. It stands to receive a flat fee of $100,000 upon completion of a possible transaction.

Colorado National Bancorp has not yet responded to the committee's motion, but it vigorously defended the actions it took on a pre-petition basis to market the bank for sale in advance of the hearing. In answering the committee's objection to it sale procedures motion on Dec. 6, the company particularly sought to downplay concerns raised by the committee regarding the certainty of closing its stock purchase agreement with the Moskvins-led group.

The company argued that the committee "mischaracterizes" the Moskvins group as "banking industry novices of questionable origin" in order to create the appearance of an "unreasonably high risk" of obtaining regulatory approval, according to the Dec. 6 filing. Instead, Colorado National Bancorp alleged, the group has "extensive banking industry experience and a proven track record of growing and running a successful regulated financial institution," and they have been engaged in an ongoing dialogue with the OCC regarding the proposed deal.

Moskvins, the filing said, has held a green card for more than four years and resides in Miami. He has more than 20 years of experience in the industry and founded Transact Pro in 2004. Colorado National Bank said Transact Pro is licensed and supervised by Latvia's Financial and Capital Market Commission as an electronic money institution and a payment institution under the terms of the European Commission's electronic money and payment services directives. It has approximately 2,000 active clients and conducts business in 25 countries.

"Transact Pro has established itself as a serious market player able to fully adhere to the standards set by the international payment systems in terms of quality, security, and compliance with rigorous regulatory expectations," the filing said.

Colorado National Bancorp also took issue with several other allegations made by the committee, including what it described as "material misstatements" about the supposed submissions of applications to the OCC and the Federal Reserve by prospective officers and directors of Colorado National Bank in connection with a proposed debt-to-equity reorganization plan that creditors had been pushing. The company cited letters from OCC and Fed representatives indicating that they had not received formal applications for those positions.

The filing also elaborated on the more than two years of marketing efforts in which Colorado National Bancorp and its advisers had engaged regarding a recapitalization, sale or merger of the bank. In addition to its previously disclosed January 2016 engagement of Atlantic Merchant Capital Advisors LLC to assist in the evaluation of potential transactions, the company said it also entered an agreement in June 2016 with GLC Advisors & Co. LLC to help identify potential merger partners for the bank. Colorado National Bancorp CEO Scott Jackson also contacted various investor groups, financial institutions and investment banking firms, including Keefe Bruyette & Woods Inc., during 2016 about a reorganization of the holding company or the bank.

Given those efforts, the company reiterated its previously stated position that the agreement with the Moskvins group which includes consideration equal to the bank's tangible common equity at closing and a commitment for an equity infusion of at least $2 million "exceeded any previous offer or indication of interest. The company said that the group's offer is "serious" and that it is "ready, willing and able to implement and perform the sale transaction."