BRADENTON, Fla. — Wells Fargo Bank NA has filed a suit in federal court for breach of contract against three Georgia charter schools that are in default on $18.93 million of uninsured bonds issued in October 2011.
Wells Fargo is trustee for the bonds, which were issued on behalf of Fulton Science Academy Inc., Fulton Educational Services Inc., and Fulton Sunshine Academy Inc.
The debt is a joint and several general obligation of the three suburban Atlanta schools. The Development Authority of Alpharetta, Ga., was the conduit issuer for the bonds.
The suit, filed in the United States District Court for the Northern District of Georgia Dec. 17, claims that Wells Fargo is owed more than $75,000 under the terms of a note with the charter schools, plus attorney's fees.
The trustee is also seeking compensatory and actual damages.
Fulton Science Academy, which is a middle school, lost its charter from the Fulton County School District in June after questions were raised about finances and operations.
The school district, citing similar concerns about finances and operations, voted last Tuesday to terminate the charter of the Fulton Science Academy high school next June. It is not clear if the school will appeal.
So far, questions have not been raised about the charter for the Fulton Sunshine Academy elementary school.
Proceeds from the bonds were to be used to build a campus to co-locate the schools.
The bonds received the investment-grade rating of BBB from Fitch Ratings when they were sold, but the rating was withdrawn earlier this year at the request of charter school officials.
Some of the bonds are actively trading. On Dec. 17, a customer bought $75,000 of bonds maturing in 2031 for 26 cents on the dollar at a yield of 24.99%.