Newsfacts: Seaway Valley Capital Corp.
2002: Ames files bankruptcy and closes stores across the North Country.
JUNE 2003: Tom and Dede Scozzafava, with two other principals, (Seaway Capital Partners) found Wise Buys.
Meanwhile, Tom Scozzafava is still involved in a New York City-based company called Greenshift, which has a branch or subsidiary named GS Carbon Trading. Wise Buys is turning a profit.
2006: ENTER HACKETTS, an established family retail business long based in Ogdensburg, which had just expanded to five stores. Hacketts announces it wants to buy Wise Buys. In the fall, the two retailers begin to convert Wise Buys stores into Hackett's stores.
JULY 2007: Tom Scozzafava, as CEO and sole Board member, acquires GS Carbon and changes its name to Seaway Valley Capital Corporation. He is paid $1.5 million, but he inherits almost $7 million in debt, most derived from convertible debentures. In a flip that surprises everyone, he announces that Wise Buys will buy Hacketts.
Here's where the story has a second starting point, a place where it becomes more complicated and more open to interpretation, because bright red bottom line of GS Carbon looks terrible to some, but do-able to others, including Tom Scozzafava. But now that debt is on Seaway Valley's books, and that has a lot to do with how things go.
OCTOBER 23, 2007: Seaway Valley acquires Wise Buys and its five stores. The original investors (Seaway Capital Partners) are bought out in preferred shares valued at over $5.8 million. Dede Scozzafava owns 30% of those shares.
NOVEMBER 7, 2007: Seaway Valley (Wise Buys) acquires Hacketts and its five stores for $6 million. The Hacketts management team stays in place. The stores bear the Hackett's name and there are promises to maintain the Hacketts "brand."
It turns out that Hacketts "financials" - were worse than expected. Scozzafava says the company was $4 million in debt. This is part of an ongoing lawsuit.
Seaway Valley has been scrambling ever since, with debts from the former GS Carbon ($6.7 million), and Hackett's (?). The Seaway Valley stock has done two reverse splits - 5 to 1 last September and 1,000 to 1 at the end of 2008. Reverse split means thousands more shares were created, so more shares can be sold and/or exchanged for convertible debentures. This dilutes the stock further. The preferred stock, like that of Dede Scozzafava and the other original investors, is not diluted.
MARCH 2008: Seaway Valley acquires a $5 million dollar line of credit from Wells Fargo.
The economy is going sour. In September 2008, Lehman Brothers fails. Credit dries up, mortgages fail, bailouts begin.
JANUARY-APRIL 2009: Wells Fargo (with a $25 billion bailout) first calls in the line of credit, then issues default notices against Seaway Valley. Seaway Valley has to pay off $5 million in six months.
MAY 2009: Original Wise Buys partners, Dede, Fred and other Scozzafavas, as Seaway Capital Partners (Dede Scozzafava is COO), trade their preferred stocks for a convertible debenture worth over $4 million.
Convertible debentures are bonds or loans that can be cashed in, or traded for stock, theoretically. They earn interest, in this case 12%, $493,000 a year.
MAY-JUNE 2009: Debt restructuring refinancing deals with Auctus Equity Company and Fuselier Holdings, two companies that specialize in making a profit from deals with companies in financial trouble.
JULY-AUGUST 2009: Seaway Capital Partners loans another $401,000 to Seaway Valley. Same interest rate.
SUMMER 2009: Hacketts stores in Canton, Pulaski and Sackets Harbor (and almost Massena) close. The remaining stores are under new, non-family management. Seaway Valley hires Herbert Becker, a new vice-president, to attempt to return Hacketts to profitability. Seaway Valley has paid off the Wells Fargo note in full.