
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, October 30, 1993                   TAG: 9310300147
SECTION: VIRGINIA                    PAGE: C3   EDITION: METRO 
SOURCE: Associated Press
DATELINE: LYNCHBURG                                LENGTH: Medium

LIBERTY FORECLOSURE AVERTED ONCE AGAIN

The Rev. Jerry Falwell's Liberty University avoided a second foreclosure attempt when investors agreed to take over a $16 million debt.

Household Finance was the last major secured creditor that hadn't reached a payment arrangement with the university.

It held the third lien on the campus and notified the school before classes began in August that it was going to foreclose.

Falwell, the school's chancellor, told students Aug. 25 at the semester's opening chapel to pray that Household Finance would delay taking action for 90 days.

Robert Hartney, a Household Finance spokesman, said Tuesday it sold its debt for an unspecified amount to a group of Lynchburg investors. He said the agreement prohibited him from saying who bought the debt and for how much.

No one connected with the school, which Falwell founded in Falwell 1971, would disclose the identity of the investors.

Representatives for the largest creditor - a group of 2,200 bondholders - were unaware that the transaction had taken place.

"There's nothing to announce," said Norm Westervelt, Liberty's vice president for administration and finance. "From a financial perspective, it didn't help us one bit."

He said the university still owes the $16 million; it's just owed to the investors now. But with Household Finance bought out, the university has successfully negotiated with all creditors who could have shut down the school, which has about 4,800 students.

Liberty's debt still hovers around $70 million, but it is now owed to numerous small creditors without strong collateral, large creditors with separate payment agreements worked out with the school, and supporters.

Household Finance's foreclosure attempt was the second on the university, which has been struggling under what was $98 million in debt two years ago.

The 2,200 bondholders hold the first and second liens on the campus and are owed about $20 million. They began foreclosure proceedings last year but worked out a seven-year payment schedule.

by CNB