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October 30, 2023

State Treasurer Responds to Birmingham Southern Statement

FOR IMMEDIATE RELEASE

October 29, 2023

Contact Treasurer’s Office:         

alatreas@treasury.alabama.gov

MONTGOMERY – On October 25, 2023, Montgomery County Circuit Court Judge James Anderson dismissed Birmingham Southern College’s case seeking to compel Alabama State Treasurer Young J. Boozer III to execute the Distressed Institutions of Higher Learning Revolving Loan Fund Act, passed on June 6, 2023, and signed into law by Gov. Kay Ivey on June 16, 2023.

The following is a response from the Alabama State Treasurer’s Office to a statement from Birmingham-Southern College President Daniel Coleman. Last week President Coleman lost his lawsuit in circuit court against the Treasurer. He now attempts to deflect blame and attack the Treasurer’s character in the court of public opinion.

“I am disappointed with the incendiary rhetoric of President Coleman. He falsely claims that I acted arbitrarily or capriciously, or in bad faith, or misinterpreted the law in question. I did not. President Coleman is wrong,” said Treasurer Boozer.

Good faith was not betrayed over the several months of working with President Coleman to attempt to deliver this bridge loan to the College. The Treasurer’s previous press releases show the activities undertaken and their timing. President Coleman was informed of them as they took place. Based on the true timeline there is no evidence that the Treasurer’s behavior was arbitrary and/or capricious.

The facts will show that any delays President Coleman encountered were dealing with the current fully collateralized and secured principal lender. Any misinterpretation of the language of the Act pertaining to collateral lies with the President because it comports with his desired narrative. The Treasurer has known and understood the Act since June 6, 2023.

The bill was conceived and written to allow for a $30 million fund for a college or many colleges providing operating funds for a term of time during which the college could raise an endowment to ensure its long-term financial stability. BSC has stated that in spring 2023, its Board of Trustees received assurances from unnamed legislative leaders supporting a measure to provide bridge funding that, should the bill pass, the College would be positioned to borrow $30 million in bridge funding required to keep it open. Those assurances were given in the absence of the legislative leaders knowing the true creditworthiness of the applicant or any terms and conditions that the Legislature would include in a law.

As required by the law, the Treasurer conducted a careful and thorough investigation of the creditworthiness of BSC and its ability to repay the loan.

The Treasurer told President Coleman on October 13, 2023, during a lengthy phone conversation that began at 1:37pm that the loan was denied. President Coleman understood the statement. The confirming letter was dated October 13, 2023, and sent.  President Coleman reported that it arrived on October 18, 2023, and claims it informed him for the first time that the loan was denied.

At the beginning of months of discussions, the Treasurer told President Coleman the college did not meet the collateral requirement in the statutory minimum requirements and that the first perfected security interest could not be attained without the existing principal lender subordinating. The Treasurer’s actions and requirements were directed by the law as passed and were always according to the actual law.

Since then, the Treasurer has never wavered from the denial based on insufficient collateral and the lack of a first perfected security interest in all collateral assts. Contrary to the statement of President Coleman, the Treasurer has not stated that the College was “not a good credit risk,” but instead, has stated that the college is a “terrible credit risk.” The college’s Moody’s credit rating of Caa2 confirms it to be a junk bond, one step above default.

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