Thompson Claim: Thompson claims the Independent Directors were fully informed and approved of the onerous terms of the Lahaina financing.
Strategic Response: The acquisition presentation given to the Board had inadequate disclosure of the onerous loan terms and the risky cross default provisions that could trigger a default of the loan if Thompson and certain affiliates filed bankruptcy.
Given that the FINRA report shows that Thompson is possibly insolvent, and that a Thompson bankruptcy would trigger a loan default and yield maintenance charges, the Company was at real risk to a recourse deficiency judgment of possibly $10 million to $12 million in excess of the collateral value. That process would take many months and perhaps years to resolve, and during that period the Company would be unable to operate in a normal fashion.
Thompson Claim: Thompson claims that the Independent Directors rejected Thompson's financing proposal that they believe would have avoided the Key Bank and Lahaina loan defaults.
Strategic Response: Thompson did present a plan to the Board after both loans were in default. The Independent Directors rightly rejected the proposal. Thompson's plan called for permanent financing to be placed on three of the Key Bank properties, which would have limited the Company's financial flexibility and would have hampered properties' sales as a way to replenish working capital. The proposal also included a line of credit for $2.75 million from an affiliate of Thompson. The line of credit called for 19% annualized interest cost and an annualized fee on any undrawn funds under the line of 7.5%.
Thompson Claim: Thompson claims "Contrary to Special Committee statements, FINRA (Financial Industry Regulatory Authority) has not accused Thompson of securities violations and does not have any jurisdiction over Thompson"
Strategic Response: The Special Committee has not commented on the FINRA lawsuit. The Company in its August 12th press release did state that "On July 30th 2013, FINRA charged Anthony W. Thompson and Thompson National Properties affiliates with securities violations, including misleading investors, withholding material information and possibly fraud in connections with offering and sale of certain investment programs. (Strategic was NOT one of the programs)." The programs referenced were the notes programs discussed above.
This statement is 100% accurate. Thompson choses to debate which Thompson affiliates were charged and are licensed and ignores the fact that Mr. Thompson himself was named by FINRA in its complaint.
To be very clear FINRA has not alleged any wrong doing in connection with Strategic Realty Trust.
Strategic Realty Trust, Inc. is a non-traded real estate investment trust which owns a portfolio of primarily grocery anchored shopping centers. The company's portfolio consists of 19 shopping centers containing 1.9 million square feet that are anchored by such grocers as Publix, Safeway and Wal-Mart. For more information you may visit the company's website at www.srtreit.com
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