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Expense reimbursements from the City of Joplin and short term line of credit advances are the only things keeping the city's master developer Wallace-Bajjalli Development Partners in a positive cash position.That assessment of the company's financial situation comes from a sworn statement filed by CEO David Wallace as he explained the reasons why Wallace-Bajjali was not yet able to pay a $450,000 settlement the company reached with a court-appointed receiver to pay back investors who were scammed in a real estate scheme that ended up costing both Wallace and his partner, Costa Bajjali, $60,000 in fines from the Securities and Exchange Commission. (The accompanying chart shows David Wallace's assessment of the company's cash flow for the final months of 2013 and 2014.)
The statement was filed October 24, 2013, in a Texas federal court as Wallace tried successfully to convince the court that he needed more time to pay the company's obligation.
Court files also included a document from the receiver indicating that while he believed Wallace, going along with the extension was about the only chance the investors ever had of seeing the settlement money. The court extended the due date to December 31, 2014.
The settlement was originally supposed to be paid by December 31, 2012, according to court records. It even included a stipulation that Wallace-Bajjali would only have to pay $300,000 if it paid early.
It quickly became apparent that was not going to happen.
In an April 5, 2012, sworn statement, Wallace expressed doubt that his company was even going to land the Joplin job.
"There is no assurance that WBDP will ultimately be selected by the City of Joplin. Indeed, WBDP, development partners and the City Council involved in the selection process have expressed concerns over the negative press coverage and blog environment resulting from groundless accusations and lawsuits against WBDP." Those lawsuits, he noted, included one by disgruntled investors who were not happy with the settlement agreement.
After the City of Joplin selected the Texas company as its master developer, Wallace, in the October 2013 statement, reassured the court that everything was heading in the right direction.
He wrote of Phase One projects, "valued at approximately $112 million (that) have been formally approved by the Joplin Recovery Commission, the necessary land has been acquired, and the projects are expected to break ground in early 2014."
Those projects included the independent senior living facility, a senior assisted living center, two loft-over-retail shopping centers, one at 20th and Main and one at 26th and Main, and the Joplin Public Library/movie theater.
'"WBDP expects to earn approximately $5 million in development from these projects in 2014.
But the Joplin project was not the only source of revenue that Wallace-Bajjali would produce during 2014, Wallace said, indicating that work was progressing on an initial public offering of Wallace-Bajjali stock.
"WBDP has been working diligently towards its goal of becoming a public company," Wallace wrote. "In June 2013, David Wallace, Costa Bajjali and members of the WBDP management team met with Mr. Andrew Hall, managing director of new listings for NASDAQ."
That meeting not only concerned what the company would have to do to get listed on the exchange, but also if the listing could be derailed by the problems with the SEC. They were assured there would be no problems.
Encouraged by this meeting, Wallace said, the company hired a financial advisory firm, TriPoint Capital Advisers in September 2013 "to assist in IPO readiness activities." TriPoint initiated an audit of Wallace-Bajjali, which was scheduled to be completed in spring 2014.
"Notwithstanding the audit," Wallace said, "TriPoint notes that the most important factor
in a successful IPO is the performance of the underlying business, in this case, the success of the Joplin and Amarillo projects. To that end, it is expected that the Joplin and Amarillo projects must be solidly underway, with vertical construction and monthly revenues flowing to WDBP before completion of the offering."
This would put the IPO at mid-2014 or beyond, Wallace said.
The IPO would help WBDP resolve a portion of the settlement, he added. "Once the IPO closes, the equity and debt holders will receive shares."
That timetable for the IPO was dependent on construction being underway in Joplin and Amarillo, something Wallace said would commence in March 2014. "Assuming that vertical construction in those cities commences," he added, the cash would be flowing.
"The development fees anticipated from Joplin and Amarillo are the most significant sources of funds for WBDP in 2014, totaling an estimated $5,019,990 (in Joplin) and $591,666 (in Amarillo)."
Even with the money coming in, Wallace said, it would take months before anything could be put toward the settlement since the company's line of credit "was directly tied to Joplin" and had to be used on Joplin projects.
No money would be available for the settlement until "the fourth quarter of 2014."
In the court documents, Wallace placed the blame for delays in the company's Amarillo project squarely on the shoulders of the City Council.
9 comments:
Randy, I love you.
So is the Globe clueless or actively ignoring or suppressing reporting on Wallace Bajali??
Wonder what a Globe poll would say on that?
Looks like the Music Man is running out of tunes to play to keep the locals on board........
You can fool all of the people some of the time.
You can fool some of the people all of the time.
BUT you cannot fool all of the people all of the time.
All the kids have always known,
that the emperor has no clothes.
But they bow down to him anyway.
It's better than being alone.
How is he paying the new guy he hired to take care of all these joplin projects? I read about his dealings in Kansas City. He basically was an employee of a large construction company for some years. He now claims to have the expertise and talent to bring people together in an inclusive manner toward advancing the projects. Sounds like more spin to me.
Just plain old crooks trying to sell snake oil and our city council is using our money to buy it.
Have any projects even been started yet? Last I heard they were still waiting to close on the old Coca-Cola property.
If any of the City Council members were hiring a contractor for their personal use they wouldn't even consider a company with so little experience, no money in reserve, and a history of scams and SEC violations. So why would they select such a shady company for the City?
Surely there are more reputable Master Developers. It's very likely one of those more reputable companies could be found in Missouri.
Doesn't Wallace Bajalli claim to have spent 3.9 million dollars on predevelopment. Something doesn't add up for those investors that Wallace Bajalli issued worthless promissory notes to. Now I don't believe WB spent that much but I wonder if the investors or judge are aware of those claims.
Doesn't Wallace Bajalli claim to have spent 3.9 million dollars on predevelopment. Something doesn't add up for those investors that Wallace Bajalli issued worthless promissory notes to. Now I don't believe WB spent that much but I wonder if the investors or judge are aware of those claims.
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