New College of Florida’s Finance and Administration committee voted Friday to take on an unconventional debt structure.
New College needs over $47 million to fund its controversial takeover of USF’s Sarasota-Manatee campus. The State University System has requirements on how colleges take out and pay off debt.
Typically, colleges aren’t allowed to take out subordinate liens—a type of secondary loan that is paid off after the primary loan. It usually comes with a higher interest rate since it’s riskier for the secondary investor.
In this case, New College was only able to secure a $40 million loan from BankUnited. An unnamed “accredited investor” would loan the college the remaining $7.5 million.
No other information is provided about the investor, but New College does say in financial documents that they were contacted through a “competitive selection process.”
Christie Fitz-Patrick, the college’s Vice President of Finance and Administration, explained at the meeting that this isn’t the final vote on the loan.
“You guys are requesting for the Board of Governors to approve us to proceed with the borrowing of this, the financing, and working with BankUnited,” Fitz-Patrick said. “And then we ultimately will enter into loan agreements, obviously, with the bank. And then that will ultimately come back before you for final approval before we close the loan.”
The measure passed the committee unanimously and will be voted on by the Board of Governors on Nov. 3.
Source: www.wmnf.org
