Wells Fargo Bank NA said in a market notice last week that the accelerated repayment of debt owed by a Georgia charter school had been rescinded.
The trustee previously said that a majority of bondholders invoked their right to order immediate repayment of the bonds after finding that the Fulton Science Academy had defaulted on the debt by leaving material facts out of bond documents.
On June 27, the trustee distributed $8.94 million of principal and $265,407 of interest to investors.
Last week, however, Wells Fargo said that effective June 29, “the acceleration of all principal and interest was rescinded.” No reason was given for the change in direction. Roughly $10 million in principal is still owed.
The trustee is reviewing remedial rights with regard to the default, and plans to advise bondholders of future actions, which may include “foreclosure, receivership, or other remedies,” the notice said.
The Alpharetta Development Authority issued $19 million of bonds for the suburban Atlanta academy in November.
At the time, the uninsured bonds had an investment-grade rating of BBB from Fitch Ratings. Proceeds were to be used to build a campus to co-locate the FSA’s three charter schools.
Shortly after the bonds were sold, the academy began controversial discussions with the county school district to renew its middle school charter, which it ultimately lost. The Fulton Science Academy applied to become a state-chartered school, but that was denied as well.
No notices to bondholders have been filed officially stating what the FSA plans to do, though local newspapers have said the school may become private.
In March, Fitch dropped the rating to CC and then withdrew it after the academy said it would no longer participate in the rating process.
