Waterside Capital Corporation Announces Filing of Receivership by the Small Business Administration
VIRGINIA BEACH, Va., Dec. 3, 2013 /PRNewswire/ -- Waterside Capital Corporation (OTC: WSCC) (the "Company"), a Small Business Investment Company, is a party, as previously disclosed, to a Loan Agreement (the "Loan Agreement") with the United States Small Business Administration (the "SBA"). Under the terms of the Loan Agreement, the Company's then existing debentures were repurchased effective September 1, 2010 by the SBA and a new debt instrument was put into place. The Company's debt to the SBA matured March 31, 2013.
Also as previously disclosed, on May 24, 2012 the SBA delivered to the Company a notice of an event of default for failure to meet the principal repayment schedule under the Loan Agreement (the "Notice"). Under the terms of the Notice and the Loan Agreement the SBA has maintained a continuing right to terminate the Loan Agreement and appoint a receiver to manage the Company's assets.
The Company has been informed that the SBA filed a complaint in the United States District Court for the Eastern District of Virginia seeking, among other things, receivership for the Company and a judgment in the amount outstanding under the Loan Agreement plus continuing interest. The complaint alleged that as of October 31, 2013 there remained an outstanding balance of $11,762,634.58 under the Loan Agreement, including interest, which continues to accrue at the rate of $2,021.93 per day. The SBA, in filing the complaint, requested that the court take exclusive jurisdiction of the Company and all of its assets wherever located and appoint the SBA as permanent receiver of the Company for the purpose of liquidating all of the Company's assets and satisfying the claims of its creditors in the order of priority as determined by the court.
The Company does not intend to contest this action and anticipates that the court will appoint the SBA as a receiver of the Company in the near future and, at such time, the officers and directors of the Company will be dismissed.
It is uncertain whether receivership, after any repayment of the amounts due under the Loan Agreement, will result in value for the Company's shareholders.
About Waterside Capital Corporation
Waterside Capital Corporation is a Small Business Investment Company (SBIC) headquartered in Virginia Beach, Virginia with a portfolio of approximately $11.8 million of loans and investments in 9 companies located primarily in the Mid-Atlantic region. Waterside Capital's individual investments range from $500,000 to over $3 million. Visit Waterside's web site at www.watersidecapital.com.
Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are "forward-looking statements" that involve a number of risks and uncertainties, including the SBA's plans regarding the event of default and the Company's inability to predict whether the receivership will result in value to the Company's shareholders (within the meaning of the Private Securities Litigation Reform Act of 1995). It is possible that the assumptions made by management in this press release may not materialize. Actual results may differ materially from those projected or implied in any forward-looking statements. In addition to the above factors, other important factors include the risks associated with the performance of the Company's portfolio companies, dependencies on key employees, delays, interest rates, the level of economic activity, and competition, as well as other risks described from time to time in the Company's filings with the Securities Exchange Commission, press releases, and other communications.
SOURCE Waterside Capital Corporation