Synovus vs. Sea Island

United States

#2 Jul 15, 2009

United States

#3 Jul 15, 2009

United States

#4 Jul 15, 2009

Since: Feb 09

Woodbine, Ga

#5 Jul 15, 2009
The page came up blank. What is it about?

Baxley, GA

#7 Jul 15, 2009

Class action sought against SynovusJul 7 2009 3:43PM EDT
A suit seeking class action against Synovus Financial Corp. has been filed alleging the company and some of its officers and directors lied about the company’s financial exposure through a loan to the Sea Island Co. resort in Georgia.

The case was filed by Coughlin Stoia Geller Rudman & Robbins LLP in the U.S. District Court for the Northern District of Georgia

The complaint alleges from Jan. 24, 2008 through Jan. 21, 2009, the company issued materially false and misleading statements about the company’s business and financial results and failed to disclose the extent of its large exposure to the Sea Island Co., a resort in Georgia, and the deteriorating condition of Sea Island.

The suit further claims Columbus, Ga.-based Synovus (NYSE: SNV) failed to “adequately and timely record losses for its impaired loans, causing its financial results to be materially false.”

The suit says the result was that Synovus stock traded at artificially inflated prices during the class period, reaching a high of $13.49 a share on Feb. 1, 2008.

After reporting a $637 million fourth-quarter loss, Synovus’ stock fell to as low as $4.52 before it closed at $4.75 a share on Jan. 22, 2009. The fourth-quarter loss included a provision expense of $364 million and a $443 million non-cash goodwill impairment charge.

On April 22, 2009, Synovus said it wasrestructuring a $220 million loanto a borrower it publicly identified as “one resort/hotel relationship.” The borrower was Sea Island Co., the Georgia hotel and resort community that in recent years underwent a renovation estimated to cost several hundred million dollars.

In an April 22 press release, Sea Island Co. announced the restructuring consolidated its outstanding debt into a new, three-year credit facility, which would be due in May 2012. The restructuring was scheduled to be completed in May 2009.

The $220 million loan was classified by Synovus as nonperforming in the first quarter of 2009 and the bank, as of its first-quarter earnings call, was nearing an agreement to restructure it. Loans are classified by banks as nonperforming when principal or interest payments are more than 90 days past due.

The loan continues the deep ties between Sea Island and Synovus. It is Synovus’ largest loan, representing 5 percent of the bank’s total capital and 15 percent of all of its nonperforming loans.

Synovus and Sea Island executives have regularly served as directors for the other’s respective companies.

The suit seeking class action claims Synovus was “extremely aggressive in granting credit, including to Sea Island, where top officers of each company sat on each other’s boards and whose enormous development projects were highly risky and would be enormously problematic if the value of residential real estate did not continue to increase and if the tourism market slowed, which was then already happening.”

It also alleges the company “failed to properly account for Synovus’ real estate loans, failing to reflect impairment in the loans.

“Synovus’ balance sheet included hundreds of millions of dollars in impaired goodwill which had not been recorded as losses on a timely basis,” the suit says.

Synovus said it stands behind its financial reporting.

“We are aware of the lawsuit but cannot comment on the specifics of the case,” a Synovus spokesperson told Atlanta Business Chronicle.“We strongly disagree with the allegations of the lawsuit and plan to vigorously defend against these allegations. Our financial reporting is subject to stringent review and independent certification, and we stand firmly behind our statements of financial performance.”

Click here to read the complete suit against Synovus.


Baxley, GA

#8 Jul 15, 2009
Synovus loans to Sea Island Co. blamed for bank's woes
Class-action status sought for legal action over statements made by Synovus bank.
By Gordon JacksonStory updated at 9:42 AM on Wednesday, Jul. 15, 2009EMAILPRINTBLOG THISCOMMENTBuzz up! KINGSLAND - Synovus Financial Corp. released false statements that downplayed risky loans to Sea Island Co., which artificially boosted the value of Synovus' stock until the problems were discovered this year, according to a lawsuit filed on behalf of those who bought Synovus securities.

The suit filed July 6 in U.S. District Court for the Northern District of Georgia asserts bank officials issued "materially false and misleading statements regarding the business and financial results [of Sea Island]" from Jan. 24, 2008, through Jan. 21.

The suit has no lead plaintiff yet, but the law firm that filed the suit is seeking enough investors to make it a class-action matter.

According to a report published in the Atlanta Business Journal on July 7, Synovus was restructuring a $220 million loan to Sea Island Co. Bank officials said they could not comment on the case, but they "strongly disagreed" with the allegations, according to the report.

The loan to Sea Island represents about 5 percent of the bank's capital, according to court documents.

"As we understand it, a shareholder complaint has been filed against Synovus," Merry Tipton, Sea Island's vice president of corporate communications, said in a statement to the Times-Union. "Because our company is not party to the suit, we have nothing to add about the substance of the dispute."

According to the suit, misleading statements by bank officials "artificially inflated" the value of Synovus stock until the problems were revealed earlier this year. The stock, which was valued at $13.49 a share in February 2008, was down to $4.51 a share on Jan. 20, according to court documents.

The stock closed Tuesday at $2.84.

The suit says Synovus failed to record losses for its loans in a timely and accurate manner, causing its financial losses to be incorrectly reported.

Synovus aggressively granted credit, including to Sea Island, where Synovus and Sea Island Co. officials sat on each other's boards, the suit said.

The suit called Sea Island's development projects extremely risky.

The debt would be "enormously problematic" if real estate values did not continue to increase and if tourism slowed, the suit said.

Synovus officials said little about Sea Island's financial problems and assured investors the debt was not a problem, the suit claimed.

Attorneys with Coughlin Stoia Geller Rudman & Robbins LLP, the Atlanta law firm that filed the suit, did not return calls for comment Tuesday.

Nearly a year ago, Sea Island laid off about 20 percent of its 2,100 employees and there have been other layoffs since.

Founded in 1928, the company owns and operates The Cloister at Sea Island, the Lodge at Sea Island Golf Club on St. Simons Island and the Lodge at Cabin Bluff in Camden County. Beginning several years ago, the company began a massive upgrade of its facilities, including demolishing and replacing The Cloister.

Since: Feb 09

Woodbine, Ga

#9 Jul 15, 2009
Thank You Anon.

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