Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, April 27, 1995 TAG: 9504270067
SECTION: VIRGINIA PAGE: B-6 EDITION: METRO
SOURCE: Associated Press
DATELINE: LYNCHBURG LENGTH: Medium
Letters sent April 20 from two committees that represent 2,200 bondholders reached the bondholders Monday and Tuesday. The letter said a payment due March 10 had not been received.
``Unfortunately, Liberty was unable to make the payment despite assurances to the contrary,'' the letter said.
Liberty officials said the school did not default on its debt. Spokesman Mark DeMoss said school officials interpreted their payment contract to mean they would not have been in default until the end of April. DeMoss said the check was hand-delivered Tuesday to a trustee overseeing the payment plan.
The bondholders began foreclosure proceedings against the university in 1992 after Liberty defaulted on payments due on about $18 million in bonds. Then both sides agreed on a plan for Liberty to pay back all of the money its owes over seven years at 6 percent interest.
Charles Graham, an Illinois bondholder, expressed frustration after receiving the letter.
``Many sad words,'' he said. ``I read that to my wife and she said `Oh, not again.'
``I'm very disturbed about the slippage in the payment, and I'm more and more of the opinion that they aren't going to be able to come up with their reduced payments,'' Graham said. ``This lack of payment comes not only as a surprise, but also a disappointment.''
The letter to the bondholders indicated that committee members also are concerned about Liberty's ability to make future payments, which continue to escalate for another five years before a balloon payment of $18 million comes due in 2000.
Liberty officials asked for an extension on the latest payment until the end of May, but the committees denied the request. The letter said Liberty officials requested the extension so they could use tuition collected for the fall semester to pay the bondholders.
``We believe that Liberty's inability to make the payment on time and the need to use next year's tuition funds to make the March payment indicates an even greater deterioration of Liberty's financial position,'' the letter read.
However, Liberty lawyer Jerry Falwell Jr. said the fall tuition money was intended to be used only as a ``last resort'' if the payment could not be obtained from ``normal sources'' such as regular tuition payments and donations.
Recent financial news from Liberty has been better. In January, supporters Daniel Reber and Jimmy Thomas said they would forgive about $30 million in debts they had purchased from other school creditors. In March, Liberty reached a settlement with Coleman-Adams Construction Co., which was owed another $1.7 million.
by CNB