A potentially historic $250 million gift to Centre College has been withdrawn after the collapse of a complex financial deal involving the donor.
Centre officials said Monday that the Eugene Brockman Trust was unable to make its planned all-stock donation, nixing what Centre had described as the largest gift ever bestowed on a private liberal arts college in the United States.
Centre issued a news release Monday morning saying that the gift had been contingent on "a significant capital market event."
"The transaction that was moving forward simply was put aside, and because of that decision, the gift that would have flowed to the college has been withdrawn," President John Roush said in an interview. "We're not trying to suggest this is anything other than a disappointing day."
The gift had been intended to finance full scholarships for 160 students a year to study business, sciences and economics.
The Eugene Brockman Trust is closely connected with the companies of Texas businessman Robert "Bob" Brockman, who attended Centre more than 50 years ago. Bob Brockman is a former chairman of Centre's board of trustees and already has donated nearly $50 million to Centre.
Brockman oversaw the 2006 merger of his Universal Computer Systems, which provides data processing services to automotive dealerships, with Reynolds and Reynolds, an auto dealer support company in Ohio. The deal was valued at $2.8 billion. The company is privately held.
Roush said the college knew that the gift was tied to completion of a complex financial deal involving Reynolds and Reynolds, but Roush and other college officials did not mention that when the gift was announced in July.
"We didn't think at that point in time that there was any possibility it wasn't going to happen," Roush said.
Earlier this summer, Reynolds and Reynolds was seeking to refinance its debt. The proposed refinancing deal would have resulted in a payout to shareholders, including the Brockman Trust, which is the controlling shareholder of Reynolds and Reynolds, according to Moody's, a financial ratings agency.
In July, Moody's downgraded the credit rating of Reynolds and Reynolds from B3 to Ba2, citing the proposed refinancing deal and plans by the Eugene Brockman Trust to give 20 percent of the company's stock to Centre.
Moody's analysts said the refinancing deal would increase Reynolds' debt by more than $3.4 billion, which would "expose the company to much greater interest-rate risk and considerably reduced flexibility."
Tom Schwartz, a spokesman for Reynolds and Reynolds, confirmed Monday that the company was "contemplating a refinancing and chose not to do that at this time," and that the deal would have included "a capital payout to shareholders."
Schwartz said a rumored sale of Reynolds and Reynolds reported in December by Reuters had nothing to do with the refinancing proposal. The sale never happened.
Reuters reported that private equity firms Carlyle Group and KKR and Co. were leading bidders for the purchase of Reynolds and Reynolds, a deal that could have been worth $5 billion.
The Eugene Brockman Trust's planned donation to Centre would have ranked among the 20 biggest gifts ever to a U.S. college or university, according to a list maintained by the Chronicle of Higher Education. It would have been the second-largest such gift to a U.S. school since 2011, according to the Chronicle of Philanthropy, surpassed only by New York Mayor Michael Bloomberg's $350 million donation to Johns Hopkins University announced earlier this year.
Stacy Palmer, the editor of the Chronicle of Philanthropy in Washington, D.C., said it was "unusual" for such a high-profile gift to be withdrawn.
"That's why you have to be careful about talking about this when you don't have the cash in hand," Palmer said.
Stock gifts are common, although most schools sell the stock immediately to diversify their holdings, she said.
"I think in this case, people will understand it was out of their (Centre's) control, but this will be a word to the wise to other institutions to be more cautious about their announcements," Palmer said.
Roush said Monday that the college announced the gift in July because the proposed stock transfer to Centre had been mentioned by Moody's in a news release, and that generated calls inquiring about the deal.
Roush said Centre would survive the embarrassment of having the gift withdrawn.
"Centre remains a remarkable place with an exceedingly bright future," he said.
Richard Trollinger, vice president for college relations at Centre, said the school's recently-launched capital campaign, the Third Century campaign, would move ahead with its goal of raising $500 million.
Centre had 1,340 students last year, half of whom were from out of state, and most of whom scored 26 to 31 out of a possible 36 on the ACT. Ninety-eight percent of its students live on its 118-acre campus in Danville.
In the past decade, Centre has raised nearly $170 million, built almost $100 million in new facilities, hosted two vice presidential debates and garnered top rankings among small private colleges.