How Do You Lose $250M?

A $250 million donation to Centre College won’t happen, and it’s a bit unclear why. College officials and the head of a Bermuda-based trust offered differing accounts Monday of the massive deal’s sudden collapse.

Just six weeks ago, Centre officials hailed the would-be donation by the A. Eugene Brockman Charitable Trust as the largest ever to a liberal arts college. The money would have funded a “fundamental transformation” for the Kentucky college, which planned to offer full scholarships to 160 students by 2017, according to a press release issued at the time and now removed from Centre's website.

On Monday, Centre announced the donation had been withdrawn. In interviews, officials there blamed the collapse of a side deal involving the would-be donor and Reynolds & Reynolds, a company with Ohio roots that provides services to auto parts suppliers. Reynolds & Reynolds CEO Robert T. (Bob) Brockman attended Centre, and was once chairman of the college’s Board of Trustees. Brockman’s late father started the Brockman trust in 1981 shortly before his death.

The trust, which is based in Bermuda, has controlling ownership in Reynolds & Reynolds and was planning to give some of its stock to Centre. College officials said the donation was apparently contingent on a multibillion-dollar plan to recapitalize Reynolds & Reynolds. The company planned to issue new debt to pay off some existing debt and would have used some of the new money to offer dividends to shareholders, including the trust.

At Reynolds & Reynolds, efforts to infuse new cash into the company fell apart sometime this summer, a company spokesman said.

“We were looking at financing and recapitalizing our balance sheet and we were pursuing that in the summer and looked at everything and we simply chose not to go forward with that right now,” said a Reynolds & Reynolds spokesman, Thomas Schwartz.

Richard Trollinger, the vice president for college relations at Centre who worked on the donation, said the recapitalization effort fell apart “for reasons unknown to the college.” Once that deal fell apart, the trust’s plan to donate $250 million was rescinded, he said.

Not so, said Evatt Tamine, the Hamilton, Bermuda-based head of the Brockman Charitable Trust. He said the college and the trust were unable to work out the details of the scholarships the trust planned to offer.

“As Centre knows... it was the scholarship side of this that derailed everything else,” Tamine said in an interview. He declined to say with more detail what the fight was about, though he cited "NCAA rules" and factors specific to nonprofits. When Centre announced the gift, it gave some details about the scholarships, which were to be for students majoring in the natural sciences, computational sciences and economics. The scholarships were going to be "full-ride-plus” and include tuition, room and board, fees and money for study abroad and summer research and internship opportunities. 

In the interview, Tamine disputed Trollinger’s account, which first blamed the loss of the donation on the restructuring at the company.

In a second interview with Trollinger later Monday evening, Trollinger said his view of the deal was that the donation “dovetailed” with the financing at Reynolds & Reynolds. He said views might differ because, as he colorfully put it, one's view of the elephant depended on what part of the elephant a person had a hold of.

“We were still in conversation trying to come to agreement on the overall scholarship program, and it was always going to be more than just financial aid, there was also a program that went along with being a Brockman scholar,” Trollinger said.

College officials, Tamine and a spokesman for Reynolds & Reynolds all said company CEO Brockman was not involved in the $250 million donation.

One question is why Centre officials heralded the donation before the deal was truly finished. The college received national attention for its July 30 announcement of the $250 million would-be donation. A college news release at the time gives no indication the donation was hanging in the balance -- a press release from the time said the college "has received" the gift -- or that it was contingent on any future event.

On Monday, it received additional national attention for the deal’s collapse.

Centre President John Roush said Monday the donation was announced earlier than he had hoped because word had begun to get out. In a Moody’s Investors Service account of the deal published on July 23, the donation was portrayed as a purchase by Centre. Roush said that description was “creating some talk,” given that Centre’s endowment is $240 million.

“We felt like we needed to go on July 30,” he said. “In retrospect, gosh, we should change some of this, but that was not the hand we were dealt.”

Tamine said there is now agreement the plan was announced too early.

"That’s exactly what happened," he said.

Trollinger, who has worked with Tamine in the past on donations to Centre, said he would not stop pursuing other donations from the trust.

“While this didn’t work out this time, I’ll be coming back to bend his ear and twist his arm, because it’s a compelling good we’re working toward,” Trollinger said.

The reversal at Centre leaves Claremont McKenna College as the recipient of the largest gift to a liberal arts college, a $200 million donation in 2007.