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Exhibit 8
July 24, 2001
Board of Directors
Camco Financial Corporation
0000 Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Board of Directors
Columbia Financial of Kentucky, Inc.
0000 Xxxxx Xxxxxxx
Xx. Xxxxxxxx, KY 41017
Dear Directors:
We have reviewed the Agreement of Merger and Plan of
Reorganization (the "Agreement") dated June 4, 2001, by and among Camco
Financial Corporation, a Delaware corporation ("Camco"), Camco Acquisition
Corp., an Ohio corporation formed in May 2001 for the sole purpose of
facilitating this merger, Advantage Bank, an Ohio chartered savings bank which
is a wholly owned subsidiary of Camco ("Advantage"), Columbia Financial of
Kentucky, Inc., an Ohio corporation, ("Columbia Financial") and Columbia Federal
Savings Bank, a federal savings bank which is a wholly owned subsidiary of
Columbia Financial ("Columbia Federal"), with a view to rendering our opinion on
the federal income tax consequences of the proposed merger of Camco Acquisition
Corp. into Columbia Financial, the subsequent merger of Columbia Financial into
Camco and the subsequent merger of Columbia Federal into Advantage.
THE MERGER
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If the holders of at least the majority of the Columbia
Financial shares adopt the Agreement, if all the necessary data regulatory
approvals are received and if all conditions to the completion of the merger are
satisfied or waived, the acquisition of Columbia Financial and Columbia Federal
by Camco will be accomplished through a three-step process. First, Camco
Acquisition Corp., a wholly owned subsidiary of Camco that was created for this
merger, will merge into Columbia
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July 24, 2001
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Financial. As a result of the merger, Columbia Financial will be a wholly owned
subsidiary of Camco. At the effective time of this merger, each outstanding
Columbia Financial share will be converted into the right to receive $6.90 in
cash and .3681 share of Camco stock, subject to possible adjustment as will be
discussed below, and all Columbia Financial shares will be cancelled and
extinguished. Second, Columbia Financial will merge into Camco, with Camco being
the surviving holding company. Finally, Columbia Federal will merge into
Advantage, with Advantage being the surviving bank.
There are a number of conditions that must be satisfied by the
respective parties in order for the merger to go forward. Columbia Financial and
Columbia Federal will not be required to complete the merger unless, among other
things, the market value of a share of Camco stock is at least $9.25 based on
the average closing price of Camco for the 10 trading days ending 5 days before
the merger closes, except that this condition will be deemed satisfied if, in
the event that the market value is less than $9.25, Camco elects to increase the
amount of cash or stock given in exchange for Columbia Financial's shares so
that the total amount of the per share consideration to be paid for each
Columbia Financial share is at least $10.30.
Camco will not issue fractional shares in the merger. Instead,
Camco will pay cash, based on the average of the bid and ask price quotes of
Camco stock on Nasdaq on the last day of trading before the completion of the
merger, to each Columbia Financial shareholder who otherwise would be entitled
to receive a fraction of the Camco stock.
Any shareholder of Columbia Financial who is not in favor of
the adoption of the Agreement and who delivers a written demand for the fair
cash value of such shares in the manner provided by Ohio General Corporation Law
Section 1701.85 shall be entitled, if and when the merger is consummated, and
upon strict compliance with procedures set forth in Ohio General Corporation Law
Section 1701.85, to receive the fair cash value of the holder's of Columbia
Financial shares, if such dissenter is a shareholder of Columbia Financial at
the effective time.
DISCUSSION
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The merger consideration being exchanged as a result of the
merger of Camco Acquisition Corp. into Columbia Financial is comprised of too
much cash to qualify as a tax-free reorganization and, as a result, the merger
will be treated for federal income tax purposes as if the shareholders of
Columbia Financial had sold each Columbia Financial share to Camco for $6.90
cash and .3681 share of Camco common stock (or for the adjusted consideration of
cash and Camco stock, if applicable). The formation of transitory Camco
Acquisition Corp. will be ignored. See Rev. Rul. 73-427, 1973-2 C.B. 301; Rev.
Rul. 79-271, 1979-2 C.B. 125.
Furthermore, the subsequent merger of Columbia Financial into
Camco will be treated as tax-free liquidation of a controlled subsidiary
pursuant to Section 332 of Internal Revenue Code of 1986, as amended (the
"Code"). In Rev. Rul. 90-95, 1990-2 C.B. 67, the Internal Revenue Service held
that a reverse triangular cash merger in which a transitory subsidiary
("Acquisition Sub") merged into a target corporation ("Target") whose
shareholders
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July 24, 2001
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received cash for their Target shares, followed by a merger of the Target into
the Acquisition Sub's parent corporation ("Parent"), would be treated as a
purchase by Parent of Target's shares followed by a tax-free liquidation of
Target into Parent. The ruling specifically held that the transactions would not
be collapsed under the step transaction doctrine and treated as though Xxxxxx
had purchased Target's assets.
Section 368(a)(1)(A) of the Code defines a reorganization to
include a statutory merger. Since the merger of Columbia Federal into Advantage
will be a statutory merger under the laws of the State of Ohio, this statutory
requirement is satisfied.
In addition, certain nonstatutory requirements have been
imposed by the courts and by the Internal Revenue Service in determining whether
reorganizations are in compliance with Section 368 of the Code. These include
requirements that there be a business purpose for the reorganization, that there
be a continuity of business enterprise of the acquired corporation, and that the
shareholders of all corporate parties to the reorganization emerge with some
continuing equity interest in the entity resulting from the reorganization.
Since Camco is the sole shareholder of both Columbia Federal and Advantage at
the time of their merger, the continuity of interest requirement will be
satisfied. The fact that the shares of Columbia Federal were recently acquired
does not preclude the satisfaction of the continuity of interest requirement.
The Internal Revenue Service regularly rules that continuity exists in such
cases and recently issued regulations confirm that view.
OPINIONS
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Based on the description of the merger in the Agreement and
the foregoing legal authorities, it is our opinion that:
1. The merger of Camco Acquisition Corp. with Columbia
Financial will be treated for tax purposes as if the shareholders of Columbia
Financial had sold each Columbia Financial share to Camco for $6.90 cash and
.3681 shares of Camco common stock (or for the adjusted per share consideration
totaling $10.30, if applicable).
2. Columbia Financial shareholders will recognize a gain or
loss on the difference between (1) the sum of (a) the fair market value of the
Camco common stock (based on the average of the bid and asked price of Camco
stock on Nasdaq on the last day of trading before the completion of the merger
plus (b) the cash (including cash, if any, paid for fractional shares) and (2)
the basis in their shares of Columbia Financial surrendered in the merger. The
gain or loss will be long term if the Columbia Financial shares were held for
more than 12 months.
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3. The basis of the Camco common stock received by the
shareholders of Columbia Financial will be the fair market value of the Camco
common stock on the effective date of the merger determined as described above.
4. Neither Camco nor Columbia Financial will recognize any
gain or loss resulting from the merger of Camco Acquisition Corp. into Columbia
Financial.
5. The merger of Columbia Financial into Camco will be treated
as a tax free liquidation under Section 332 of the Code. Camco will recognize no
gain or loss on the receipt of property received in connection with the
liquidation of Columbia Financial. Columbia Financial will recognize no gain or
loss on the distribution of any property in complete liquidation.
6. The tax basis of the assets of Columbia Financial in the
hands of Camco will be the same as the basis of such assets in the hands of
Columbia Financial immediately prior to the merger.
7. The merger of Columbia Federal into Advantage will
constitute a reorganization under Section 368(a)(1)(A) of the Code. No gain or
loss will be recognized to either Columbia Federal or Advantage.
8. The basis of the assets of Columbia Federal in the hands of
Advantage will be the same as the basis of such assets in the hands of Columbia
Federal immediately prior to the merger.
9. Any shareholder who perfects dissenters rights and receives
the fair cash value of the shares of Columbia Financial will recognize gain or
loss on the difference between the fair cash value and such shareholder's basis
in the shares of Columbia Financial.
This opinion is not binding on the Internal Revenue Service
and no ruling has been, or will be, requested from the Internal Revenue Service
as to any federal income tax consequence described above. Although this opinion
is based upon our best interpretation of current provisions of the Code and
Treasury Department regulations promulgated thereunder, as well as existing
court decisions and administrative rulings and procedures, and sets forth the
conclusions we believe will be reached by a court if the issues were properly
briefed and presented to it, no assurance can be provided that a court in fact
would agree with our interpretation. Further, no assurance can be provided that
the applicable law will not change in a manner that will adversely affect these
consequences, and such adverse change could be retroactive.
No opinion is expressed as to any federal income tax
consequence other than as specifically set forth herein, and no opinion is
expressed with respect to the amount or timing of any federal income tax
deduction or credit or with respect to any tax issue arising under state,
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local, or foreign tax provisions. Further, any change in the facts set forth
herein or in the agreement could affect this opinion, perhaps in an adverse
manner.
Very truly yours,
Xxxxx, Xxxxx, Xxxxxxx and Xxxxx LLP
