Faced with reluctant sellers, the owners of Spokane-based AmericanWest Bank have upped the ante in their proposed takeover of troubled PremierWest Bank.

Faced with reluctant sellers, the owners of Spokane-based AmericanWest Bank have upped the ante in their proposed takeover of troubled PremierWest Bank.

The parties said today Starbuck Bancshares Inc. has increased its bid for the Medford bank to $2 per share, a 21 percent increase worth an additional $3.5 million for PremierWest shareholders, who have remained cool to the previous $1.65 per share offer.

PremierWest executives have twice extended voting on the Oct. 29 deal in which Starbuck would pay $1.65 per share, amounting to more than $16 million. It also would pay off PremierWest's $41.4 million TARP Capital Purchase Program debt to the U.S. Treasury.

The amended deal will be worth a little more than $20 million.

"We are very pleased to announce the increased merger consideration to our common shareholders and we continue to believe that the merger with AmericanWest Bank is in the best interests of PremierWest shareholders," Jim Ford, PremierWest's president and chief executive officer, said in a statement.

There are slightly more than 10 million outstanding PremierWest Bancorp shares and as of Wednesday nearly 1.8 million shares had yet to be voted, leaving the company short of the majority vote needed to approve the deal. A shareholders' meeting will reconvene at 9 a.m. Thursday, March 28, at PremierWest's headquarters, 503 Airport Road, Medford. (Clarification: See below)

As of last week, 49.2 percent of all shares — and 60 percent of the shares voted — have been cast in favor of the deal.

To pass, the deal must get approval from more than 50 percent of all shares, which means another 78,106 of the 1.8 million unvoted shares must be submitted in support for the proposal to succeed. Unvoted shares have the same effect as a no vote.

Tom Hannah, a Eugene shareholder who has voiced opposition to the agreement, said the change likely will push enough votes into the approval column to seal the deal.

"The deal only needs a fraction of 1 percent of shareholders to switch their votes or vote in favor of the merger, and then it will get done — and the extra cash incentive is likely enough to make that happen," Hannah said. "So it is probably a fantasy to expect the third vote to come out negative. That is what should happen because that's the best way for shareholders to be treated fairly; but it probably won't."

Hannah wondered from whose coffers the additional $3.5 million will come.

"Did AmericanWest pony up an additional $3.5 million, even though they previously said they would not be willing to pay more?" he said. "Or was there a renegotiation with one or more of the preferred shareholders groups agreeing to take a haircut? It seems shareholders should have been told where the sweetener came from."

Most shareholders have seen their holdings lose substantial value in recent years.

"Some are losing millions, particularly some of the folks who came aboard via Stockmen's Bank or other mergers," Hannah said. "But unless a miracle happens and the third vote still goes negative, this may be the best we can expect."

The $2 offering represents a premium of approximately 32.5 percent over the $1.51 per share closing price of PremierWest common stock on Oct. 26, the trading day immediately before the announcement of the merger agreement, and a premium of approximately 40.3 percent over the average price in the 20-trading days leading up to the announcement.

Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter @GregMTBusiness, and read his blog at www.mailtribune.com/Economic Edge.

Clarification: The shareholder meeting's exact date has been clarified in this version.