Rhodium BA Holdings Submits Proposal to Acquire Sunnyside Bancorp for $18.50 per Share

Rhea-AI Summary

Rhodium BA Holdings LLC, owning approximately 9.82% of Sunnyside Bancorp, Inc. (SNNY), has proposed a cash acquisition of the company for $18.50 per share. This offer represents a 23% premium to Sunnyside's recent closing price and is higher than the merger agreement with DLP Bancshares. Rhodium alleges that multiple previous offers were rejected by Sunnyside's Board without explanation. They have prepared for an expedited acquisition process, emphasizing the proposal's advantage for shareholders and the lack of regulatory hurdles.

Positive

• Rhodium's offer of $18.50 per share represents a 23% premium over Sunnyside's recent closing price.
• The acquisition proposal is significantly higher than the price agreed upon with DLP Bancshares.
• Rhodium claims no significant financial or regulatory impediments to the acquisition, ensuring a smooth process.

Negative

• Sunnyside's Board has rejected previous offers from Rhodium without explanation, raising concerns about shareholder interests.
• The Board's agreement to restrictive covenants may prevent consideration of better offers, limiting shareholder value.

Rhodium BA Holdings LLC (“Rhodium”), a New York-based investor, which through its special purpose subsidiary OppCapital Associates LLC beneficially owns approximately 9.82% of the outstanding common shares of Sunnyside Bancorp, Inc. (OTCBB: SNNY) (“Sunnyside” or the “Company”), today sent a letter to the Company’s Board of Directors presenting a fully financed proposal to acquire Sunnyside for $18.50 per share in cash.

Over the past twelve months, Rhodium has privately approached the Company with multiple expressions of interest to acquire the Company on attractive terms, which were rejected without explanation by Sunnyside’s Board of Directors. Rhodium’s current offer represents a 23% premium to Sunnyside’s closing price on April 19, 2021, a 19% premium to the price offered by DLP Bancshares Inc. and a 50% premium to the Company’s unaffected share price on March 16, 2021 prior to the announcement of the DLP Bancshares Inc. offer.

The full text of the letter follows:

April 20, 2021

Board of Directors
Sunnyside Bancorp, Inc.
56 Main Street
Irvington, New York 10533
Attention: Timothy D. Sullivan, Chairman

Dear Members of the Board:

I write on behalf of Rhodium BA Holdings LLC (“Rhodium”), which through its special purpose subsidiary OppCapital Associates LLC beneficially owns approximately 9.82% of the outstanding common stock of Sunnyside Bancorp, Inc. (“Sunnyside”). As you know, Rhodium has expressed its interest in purchasing up to 100% of Sunnyside’s stock on multiple occasions throughout the past twelve months. Rhodium initially expressed this interest to you in July 2020 and the offer—though it would have been potentially quite attractive to shareholders—was rejected without explanation. Rhodium again contacted you by letter on November 10, 2020, offering to purchase up to 100% of Sunnyside at a 15% premium to its tangible equity. This offer was likewise declined without explanation.

We were thus surprised by your announcement that you signed a definitive merger agreement with DLP Bancshares Inc. on March 16, 2021, without communicating with Rhodium with respect to its documented and sincere interest in a like transaction, especially considering that the agreed-upon merger price offered very little premium to Sunnyside’s trading price and was well beneath Rhodium’s then-most recent offer. Accordingly, we once again sent a letter to you on March 25, 2021 offering to purchase up to 100% of Sunnyside at a per share price in excess of the merger price, even when considering any break fees payable, and, once again, you summarily rejected our offer without explanation.

This Board’s continued refusal to engage in any discussion whatsoever with Rhodium comes at the clear expense of Sunnyside’s shareholders and their ability to receive a substantial and certain all-cash premium for their shares. We struggle to understand how your failure to engage with an interested, good-faith buyer, one that had offered a higher per share price before the merger was announced, can possibly be reconciled with the fiduciary duties of the Board to its shareholders. Moreover, upon review of the merger agreement, you have further stifled your fiduciary obligations by agreeing to restrictive covenants and lock-up provisions that all but ensure that the Board will perform no market check, discourage competing bids, and otherwise dispose of its duties to seek the best possible value for Sunnyside’s shareholders.

Because we remain committed to a transaction and our interest in Sunnyside remains high, Rhodium is prepared to proceed immediately with a fully financed, cash offer for 100% of the outstanding shares of Sunnyside at $18.50 per share. This represents a 23% premium to Sunnyside’s closing price as of Monday, April 19, 2021 of $15.00, a 19% premium to the merger price and a 50% premium to Sunnyside’s unaffected share price on March 16, 2021. Unlike our previous attempts to engage this Board privately, we have decided to make this offer public so that Sunnyside shareholders will be able to independently evaluate our offer.

Rhodium is determined to pursue our proposed acquisition expediently and without delay. We have also thoroughly considered the regulatory issues related to this acquisition and there are no significant financial or regulatory impediments to your shareholders’ timely realization of this substantial cash premium. In sum, we are making a cash offer which is far more favorable to shareholders than what has been agreed upon currently by the Board, with a high degree of certainty of closure.

We have already committed significant time and resources to this proposed acquisition. We have engaged Venable LLP and Thompson LLP, as legal counsel, Gagnier Communications, as public relations advisor, and MacKenzie Partners, as advisor and information agent.

We possess a highly sophisticated, local team who will leverage their extensive experience in this industry to strengthen Sunnyside’s customer, financial, and employee relationships. We believe there will be substantial shareholder support for this proposal and that it represents a terrific outcome for Sunnyside’s shareholders. Accordingly, if we have not received your response by 5:00 p.m. EDT on Wednesday, April 28, 2021 indicating that Sunnyside will enter into a confidentiality agreement and proceed with constructive discussion and meaningful evaluation of our offer, we will take our compelling offer directly to your shareholders.

We look forward to your timely response.

Sincerely,

/s/ Mark M. Silber

Mark M. Silber
Managing Member
Rhodium BA Holdings LLC

About Rhodium BA Holdings LLC

Rhodium BA Holdings LLC was formed by Mark M. Silber for purposes of conducting the purchase of Sunnyside Bancorp, Inc. Mark M. Silber is a Managing Partner of Rhodium Capital Advisors, a New York-based fully integrated real estate investment firm with a primary focus on the preservation, acquisition, and management of affordable housing across the United States. Rhodium Capital Advisors is not participating in the purchase of Sunnyside Bancorp, Inc.

Additional Information

This communication relates to a proposal that Rhodium has made to the Board of Directors of Sunnyside and does not constitute an offer to buy or solicitation of an offer to sell any securities or the solicitation of any proxy, vote or approval. Subject to future developments, Rhodium may file one or more documents with the Securities and Exchange Commission (the “SEC”). Investors and security holders of Sunnyside are urged to read such documents filed with the SEC carefully in their entirety if and when they become available.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210420005808/en/

FAQ

What is Rhodium's acquisition proposal for Sunnyside Bancorp (SNNY)?

Rhodium proposes to acquire Sunnyside Bancorp for $18.50 per share in cash, representing a 23% premium to its recent closing price.

How does Rhodium's offer compare to the DLP Bancshares merger?

Rhodium's offer is 19% higher than the merger price offered by DLP Bancshares, presenting a more favorable option for shareholders.

What percentage of shares does Rhodium own in Sunnyside Bancorp (SNNY)?

Rhodium owns approximately 9.82% of the outstanding common shares of Sunnyside Bancorp.

What are Rhodium's plans if Sunnyside's Board does not respond?

Rhodium intends to take their acquisition offer directly to Sunnyside's shareholders if they do not receive a timely response by April 28, 2021.

Are there any regulatory concerns regarding Rhodium's acquisition of SNNY?

Rhodium states there are no significant financial or regulatory impediments to the timely realization of their cash offer for Sunnyside.