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Under the "agreement in principal" with the Clarence-based start-up bank, Trillium Group will receive Series A non-cumulative perpetual preferred stock in exchange for its cash injection.
That's a matching investment, however, conditioned upon the bank receiving another $3 million in new capital in a private placement from members of the bank's board, other current shareholders and new investors, who will also get preferred shares.
The sale will be conducted in two stages, with the first $4.7 million closing in April, consisting of $2.5 million from Trilliam and $2.2 million by others. If successful, a second $1.3 million will come in the second quarter, including $500,000 from Trillium.
Trillium, founded in 1997, specializes in managing early stage venture capital and growth equity funds. Its partners are also experienced managers, having served as CEOs, presidents and directors of a range of start-ups, joint ventures and even Fortune 100 multinationals.
"The Bank's Board of Directors is very pleased that one of Upstate New York's leading private equity firms has agreed to make this significant investment," said Waterford President and CEO Orrin D. Tobbe, in a statement. "This new capital will provide the financial strength and flexibility necessary for us to continue to institute our new strategic and tactical business plan for growth."
Trillium's investment comes as Waterford and its executives are under fire in a lawsuit by bank founder and former CEO Kathleen Kiesel Flemming. Among other things, Flemming accuses the bank of fraudulently entering into an agreement with her in October to pay her $60,000 if the capital campaign she had undertaken at the time was successful in raising as much as $10 million.
The lawsuit indicated she even provided contacts for potential investors, but alleges the bank had no intention of following through, and instead abandoned her plan in favor of the Trillium investment, which doesn't require any payment to her. She is seeking $60,000 in lost compensation as part of the larger suit.
jepstein@buffnews.com
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