A co-founder of the Food Lion grocery store chain, who said he is a “substantial” owner of Bank of America stock, said the bank’s decision to write off millions of dollars in debt for the NASCAR Hall of Fame was wrong and will hurt shareholders.
Ralph Ketner of Salisbury, who founded the chain in 1957, e-mailed Bank of America chief executive Brian Moynihan on Tuesday about the decision to forgive $19.1 million in NASCAR hall debt.
Bank of America and Wells Fargo have agreed to write off the loan pending City Council approval Monday.
The two banks have said that they want to support the hall, which opened in 2010 and has fallen short of attendance and revenue projections.
“Please, before giving any part of the $19.1 million, think of your obligation to your shareholders and do the right thing by trying your best to collect the monies due your bank and its shareholders,” Ketner wrote in an e-mail.
Council members heard about the proposal Monday night. Some homeowners who have struggled with possible foreclosures have complained about the proposal, saying they wish the banks would give them a similar break.
The banks said they have modified loans for more than 2 million customers between them.
Ketner’s complaint comes from the other direction. He believes the deal penalizes shareholders.
Ketner, who is 94, retired from the grocery store 22 years ago. He is an adjunct professor of the Ketner School of Business at Catawba College and a member of the board of trustees at the school.
When the hall was built, it was partially funded with a $19.1 million loan from the two banks. The money was to be paid back with money from the sale of commemorative bricks and corporate sponsorships.
But revenue from those two sources fell far short of projections, and the city hasn’t made a single payment toward the debt.
The deal calls for the Charlotte Regional Visitors Authority, which manages the city-owned hall, to pay the banks $5 million. In exchange, Bank of America and Wells Fargo will forgive $14.1 million in principal and $3.5 million in accrued interest.
One problem for the banks is that the original loan is “no recourse,” meaning the banks can’t seize any collateral.
The banks could have chosen to take that amount of money the hall currently receives each year in sponsorship revenue: $500,000 a year.
At that rate, it would take 10 years to make $5 million and 40 years to get $20 million.
The amount of sponsorship money could decline, however, if sponsors decide not to renew.
City Council member Kenny Smith said he is concerned about the city’s proposal not to pay off the debt.