Alabama State Treasurer Young Boozer is “disappointed with the incendiary rhetoric” of Birmingham-Southern College (BSC) president Daniel Coleman after he said last week Boozer acted in “bad faith” in denying a state loan to the private school.
Birmingham-Southern is on the brink of a possible shutdown due to financial missteps by the College’s administration in previous years and declining enrollment. Boozer recently denied a $30 million state loan to bail the private school out.
Legislators passed the Distressed Institutions of Higher Education Revolving Loan Program and appropriated $30 million in the 2023 legislative session. The Alabama State Treasurer’s Office administers the program.
Montgomery County Circuit Judge James Anderson dismissed a lawsuit last week filed by Birmingham-Southern against Boozer for the loan denial.
Coleman said in a statement Wednesday after the lawsuit was dismissed, “We are disappointed with this ruling and are exploring our options, which may include an appeal to the Alabama Supreme Court with a request for an expedited briefing.”
“While the Alabama Constitution provides for immunity to state officials, such immunity should not apply to those who act arbitrarily or capriciously, or in bad faith, or who have misinterpreted the law in question,” Coleman said. “Our good faith was betrayed over the several months of working with Treasurer Boozer to deliver this bridge loan to the College. The timeline of our interactions clearly demonstrates that his behavior was arbitrary and capricious. We also believe he is misinterpreting the language of the Act pertaining to collateral.”
Officials with the Alabama State Treasurer’s Office said on Sunday to 1819 News that they followed the law denying the loan and that BSC has a credit rating “one step above default.” They added that BSC’s Coleman “now attempts to deflect blame and attack the Treasurer’s character in the court of public opinion.”
“I am disappointed with the incendiary rhetoric of President Coleman. He falsely claims that I acted arbitrarily or capriciously, or in bad faith, or misinterpreted the law in question. I did not. President Coleman is wrong,” Boozer said in a statement.
An Alabama State Treasurer’s Office spokesperson said the loan denial was “based on insufficient collateral and the lack of a first perfected security interest in all collateral assets.”
“Contrary to the statement of President Coleman, the Treasurer has not stated that the College was ‘not a good credit risk,’ but instead, has stated that the College is a ‘terrible credit risk.’ The College’s Moody’s credit rating of Caa2 confirms it to be a junk bond, one step above default,” the spokesperson said in a statement.
The spokesperson continued, “The facts will show that any delays President Coleman encountered were dealing with the current fully collateralized and secured principal lender. Any misinterpretation of the language of the Act pertaining to collateral lies with the President because it comports with his desired narrative. The Treasurer has known and understood the Act since June 6, 2023.”
“The bill was conceived and written to allow for a $30 million fund for a college or many colleges providing operating funds for a term of time during which the College could raise an endowment to ensure its long-term financial stability. BSC has stated that in spring 2023, its Board of Trustees received assurances from unnamed legislative leaders supporting a measure to provide bridge funding that, should the bill pass, the College would be positioned to borrow $30 million in bridge funding required to keep it open,” the spokesperson said. “Those assurances were given in the absence of the legislative leaders knowing the true creditworthiness of the applicant or any terms and conditions that the Legislature would include in a law.”
According to the Alabama State Treasurer’s Office, the Treasurer “conducted a careful and thorough investigation of the creditworthiness of BSC and its ability to repay the loan.”
“The Treasurer told President Coleman on October 13, 2023, during a lengthy phone conversation that began at 1:37 p.m. that the loan was denied. President Coleman understood the statement. The confirming letter was dated October 13, 2023, and sent. President Coleman reported that it arrived on October 18, 2023, and claims it informed him for the first time that the loan was denied,” the spokesperson said. “At the beginning of months of discussions, the Treasurer told President Coleman the College did not meet the collateral requirement in the statutory minimum requirements and that the first perfected security interest could not be attained without the existing principal lender subordinating. The Treasurer’s actions and requirements were directed by the law as passed and were always according to the actual law.”
Attorneys for Birmingham-Southern said the school’s board will decide at a meeting on October 31 whether or not to close the school.
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