An agreement by the A. Eugene Brockman Charitable Trust to endow 160 full scholarships at Centre College, in Danville, Ky., came together this summer after less than two months of negotiations. On Monday officials at Centre announced that the deal had come undone even more quickly because of a “significant capital market event” that left the donor unable to make its planned $250-million stock gift to the college.
The gift, which was to have established the Brockman Scholars Program in Leadership and Entrepreneurship, would have been the largest ever to a liberal-arts institution. In announcing the deal on July 30, Centre described it as a $250-million stock donation, but the transaction turned out to be much more complicated than that.
“This was part of a major reorganization and recapitalization of … considerable size and complexity,” said Richard W. Trollinger, vice president for college relations at Centre. “It was a multibillion-dollar deal.”
He described his institution and the Brockman Trust as “minor players in a much bigger corporate reorganization recap that for whatever reason—reasons that are unknown to us—did not come to fruition.”
Robert T. Brockman, a former chairman of Centre’s Board of Trustees and a onetime student of the college, is the son of A. Eugene Brockman, founder of the trust. The gift to the college was to be in the form of stock in Universal Computer Systems Holding Inc., which merged in 2006 with the Reynolds and Reynolds Company. Robert T. Brockman is chairman and chief executive of the merged company. The Brockman Trust, according to Mr. Trollinger, owns a substantial portion of the stock in Universal Computer Systems Holding Inc.
Tom Schwartz, a spokesman for Reynolds and Reynolds, said on Monday that the company had been “contemplating” refinancing its debt this summer in a recapitalization that would have included a payout to shareholders. “We chose not to do that.” Because Reynolds and Reynolds is a privately held company, he said, he is unable to say “who may or may not be a shareholder.”
Mr. Trollinger said the college was forced to announce the $250-million gift from the trust in July after news about the corporate reorganization and recapitalization hit the financial news wires. Faculty members at the college started getting curious calls from old grad-school colleagues who were working in finance.
“The story was that Centre was acquiring $250-million worth of the stock” of Universal Computer Systems Holding Inc., Mr. Trollinger said. “People were wondering how an institution with a $230-million endowment could be doing that.”
Neither the college nor the Brockman trustee who negotiated the deal thought that it could fall through, Mr. Trollinger said. “But there clearly was a level of risk involved that we weren’t aware of and we couldn’t have anticipated,” he said.
John Lippincott, president of the Council for Advancement and Support of Education, said he did not know of any gift of this magnitude having been withdrawn after a public announcement was made. (In 2006 Larry Ellison, founder of the Oracle Corporation, backed out of a $115-million pledge to Harvard University after Lawrence Summers resigned as the institution’s president.)
Mr. Lippincott said that both the Brockman Trust and Centre College had negotiated their deal in good faith.
“The gift was motivated by the intention of the donor to support scholarships at Centre and was precipitated in part by the fact that there was a planned corporate reorganization that was going to yield a fairly substantial payout to the donor,” he said.
Ultimately, Mr. Lippincott said, neither the college nor the trust will suffer damage to its reputation.
“When the dust settles on this,” he said, “what people will remember is the fact that there was a donor who thought that Centre was worthy of an investment at that level.”Return to Top