Negotiations between ACCC and university come to a halt
- Published: April 3, 2008
ACCC offers $10 million for 10 seats on the board
While the ACCC has taken its proposal of $6 million in cash and $6.2 million within five years off the table, there is still another proposal for the Antioch University trustees to consider, according to ACCC co-chair Eric Bates on Sunday. The group has offered the university $10 million in cash in return for 10 seats on the university’s 19-member board of trustees.
“This arrangement would have eliminated the immediate need for a costly and complex transfer of the College’s assets,” Bates said in the press statement released Friday. “In addition to ensuring continuous and uninterrupted operation of the College, it would have created a truly philanthropic board for the University — one that would have contributed significantly more than the current trustees have reportedly given this past year.”
The nine members of the ACCC include six former university trustees. The group has contributed $9 million of its own money to the effort to transfer ownership of the college. In contrast, according to Bates, the current university trustees have given less than $25,000 to the college in the current fiscal year.
Negotiations between Antioch University and the Antioch College Continuation Corporation, or ACCC, came to an end Friday, March 28, when the university did not respond to the deadline set by ACCC for a response to its final offer to purchase the college.
The deadline had been noon on that day, according to ACCC co-chair Eric Bates. Bates said the deadline was set because the university negotiating team seemed to be stalling and that for the college to continue operations next year, a deal had to be made immediately.
“This is a sad day not only for Antioch, but for all those who care about progressive education in this country,” Bates, who took part in the negotiations, said in an ACCC statement released Friday. “Presented with an opportunity to both fulfill its fiduciary responsibility and preserve the College’s historic mission, Antioch University chose instead to pursue a path that raises serious questions about its educational values and financial competence.”
The two groups had been negotiating for four months toward the goal of transferring ownership of the college from the university to the ACCC, a group of former trustees and major donors.
In a statement released by the university on Friday, university spokesperson Lynda Sirk stated that while the two sides had reached agreement on the purchase price of $12.2 million, there were two sticking points: first, the university did not accept the ACCC’s offer to pay half that amount up front and half within five years because the ACCC did not adequately secure the debt, and second, the question of who would own WYSO Public Radio.
“Despite our major concessions, ACCC has been unwilling to meet our needs to have the consideration paid entirely in cash at closing,” Board Treasurer Bruce Bedford said in the university’s statement. According to Bedford, the installment payment “would likely not be acceptable to the University’s creditors which must ratify the terms of any deal.”
According to Murdock in a Dayton Daily News article Saturday, the university has significant bond debt on the new Antioch University McGregor building, as well as buildings in Seattle and New Hampshire.
In an interview Sunday, Bates said, “The issue of security isn’t really the issue. It’s a smokescreen.”
During negotiations the ACCC asked the university negotiating team if the ACCC offer would be adequate if the university’s creditors agreed to the offer, and the university team said no, according to Bates, a former university trustee who is the deputy managing editor of Rolling Stone magazine.
Overall, he said, “throughout the process the university negotiating team seemed far more interested in inventing obstacles than finding solutions,” he said. “If they wanted the college to succeed, this deal would have made that happen.”
The university negotiating team is composed of Antioch University Chancellor Toni Murdock, Chief Financial Officer Tom Faecke and two university attorneys. For the ACCC, Bates, David Goodman and ACCC attorneys did the negotiating.
Murdock, Bedford and University Board President Art Zucker did not respond to requests for interviews for this article.
Alumni staff locked out
In a swift and angry response Friday to the breakdown of the negotiations, Antioch College alumni, working through the College Revival Fund, released a statement Friday praising the efforts of the ACCC and denouncing the university’s negotiating team.
“The suspicion that the University Board of Trustees was negotiating in bad faith and not interested in saving the College has, unfortunately, been confirmed,” Ellen Borgersen, acting president of the CRF, stated. “Over the past four months, the Antioch College Continuation Corporation labored mightily to put together an offer that would be a win-win solution for the university and the College, as well as for the community and for everyone who believes in what Antioch stands for.”
The CRF called for alumni to support the efforts of Nonstop Antioch, the effort of current college faculty and students to keep the college going off-campus if necessary.
“The community, while saddened, is undaunted, committed and most of all, passionate about Antioch and its future. Nonstop Antioch is just that — Antioch College for our time and Antioch College for all time,” she wrote.
College alumni had raised more than $18 million to keep the college open since the trustees announced in June that Antioch would close in July, 2008. At the last meeting of the alumni board, the board committed $1 million of that amount toward Nonstop Antioch.
On Tuesday, the Antioch College Alumni Board called on the trustees to meet in person with the ACCC. Although the ACCC has requested such a meeting and several board members have also sought the opportunity, the entire board has never met with the ACCC. (See Borgersen letter, page 4.)
In another alumni-related action, at about 4 p.m. on Friday, Antioch College Department of Institutional Advancement employees were told to leave their offices and not return, after which the locks to the department’s building, Weston Hall, were changed. According to alumni associate director Aimee Maruyama, who was one of the employees, they were stunned by the action, which took place during a going away party for a colleague.
“If they were securing the office from outsiders, that’s one thing. But we’re employees,” Maruyama said on Monday.
The group of five employees, including all of the college’s fund raisers, were told to go to the office of Antioch College Chief Operating Officer Andrzej Bloch, who told them they were no longer needed because the negotiations had broken down. According to Maruyama, Bloch said the decision had been made by the board of trustees. However, on Monday, he stated that he had made the decision and that he had never said otherwise.
Following the meeting with Bloch, the employees were escorted back to Weston Hall, where they were given a short time to pick up their things, under the eye of a university administrator. Then a locksmith changed the locks and they were told not to return to work, according to Maruyama.
“We need to secure the building. It is full of records,” Bloch said on Monday in explanation of the action. “The point is, we need to reorganize the Office of Institutional Advancement as soon as possible.”
The employees were placed on administrative leave and will be paid through the end of their contracts June 30, he said.
According to Antioch College Communications Director Lynda Sirk, there was nothing unusual about locking the department’s staff out of their offices when their services were no longer needed.
“That’s fairly standard business practice,” she said. “The office is closed. We are no longer raising money.”
Sticking points
The ACCC’s final offer was to pay the university $12.2 million in total, with $6 million upfront and $6.2 million over the next five years. The ACCC provided adequate financial security for the $6.2 million, Bates said, including securing the loan with the college’s mortgage, and also with an agreement to turn over to the university all college assets if the ACCC plan fell through.
“We in fact were fully prepared in terms of security,” Bates said, describing the two proposals as “both financially reasonable and legally enforceable.”
The ACCC did not offer the full $12.2 million up front because the group didn’t have it, according to Bates. While the alumni board raised more than $18 million in the past eight months, most of that money is restricted in its use for college operations, not for paying the university, he said.
Beyond that, according to Bates, the group seeks to make Antioch College viable, and “every dime the university wanted for itself is a dime not available to the college at the time of its greatest need.”
But securing the debt with the college’s mortgage is not reasonable, Sirk said this week, because if the ACCC defaults, the university would have to put the college up for sale “on the sheriff’s auction block,” and would not do so.
Besides money, the second sticking point in negotiations regarded the ownership of WYSO. While the university negotiating team intitially said that all assets that the college had had before the creation of the university system would stay with the college, according to Bates, and WYSO clearly fit that category, the university later said it wanted WYSO. In response, the ACCC offered two options: either the university could have Antioch Education Abroad or WYSO, both long-term college assets, but not both. In response, the university requested that it keep AEA and that WYSO be jointly operated by both the college and the university, with the college providing operating costs. The ACCC agreed, Bates said.
“We immediately accepted that,” he said. “We thought it was a creative solution.”
However, according to Bates, several days later the university team retracted that proposal and stated that it wanted complete ownership of both WYSO and AEA.
The university team appeared to regard the WYSO license as a valuable asset that the university could then sell, according to Bates.
Board not unanimous
According to the university press statement on Friday, the board met Wednesday, March 26, to consider the ACCC’s last proposal. However, “after hours of deliberation and debate” according to the statement, “the board concluded unanimously that some of the terms of the proposal created unacceptable risk to the University and could not be accepted. The plan was not viable.”
But Trustee Paula Treichler stated this week that she thought the document to which she signed her name was a letter from Murdock and Zucker to the ACCC stating that the two groups were very close, and only two items of disagreement remained. She meant to be signing a letter of encouragement to the group, she said, and was surprised to see the action presented in the press statement as one dismissing the ACCC’s proposal.
“The intent was to send a signal to the ACCC that we were well disposed to their proposal,” Treichler said. “That was my intent in allowing my name to be used.”
The statement that the trustees’ vote against the ACCC proposal was unanimous is misleading, according to Treichler.
“There is not total unanimity on the board,” she said. “Many of us are eager to have this work.”
Part of the difficulty in the trustees reaching an agreement with the ACCC is what she perceives as the trustees’ lack of information, according to Treichler.
“I feel strongly that a face-to-face meeting with the ACCC would have been productive rather than their only meeting with a negotiating team that had specific interests,” she said. “The control over communication has not been constructive. Sources of information to the trustees have been extremely limited.”
While the ACCC requested a face-to-face meeting with the board in February, that request was denied. According to Murdock at the time, the ACCC had already agreed to a process that involved meeting only with the university’s negotiating team, so that meeting with the whole board would mean changing the rules. According to Bates at the time, the ACCC never agreed that it would not meet with the board.
Show me the money
If the university negotiating team truly wanted to strike a deal with the ACCC, it would have had a more reasonable starting position, according to Bates. Instead, initially, the university negotiating team asked the ACCC to pay $54 million to purchase the college.
But the difference between that amount and the board’s final agreement to accept $12.2 million instead indicates that the university did want to make a deal, Sirk said this week.
However, the university asking such a high price caused negotiations to stall for far too long during a time when each day mattered to the college’s ability to remain open, according to Bates, who said the university negotiating team presented the $54 million amount to the trustees at their February meeting.
“We lost nearly a month of critical time,” he said. Included in that proposal was the demand that the college pay the university $22 million to receive its $22 million endowment of restricted funds, according to Bates.
According to Sirk this week, $54 million was the opening price because that amount is considered the fair market value of the college.
Getting the most money possible for the college, regardless of the effects on the college’s ability to survive, seemed the university negotiating team’s goal, Bates said.
“Throughout this process, they have attempted to profit off the college’s difficulties,” he said.
During the course of negotiations, the ACCC team asked what the university would do with the college if no agreement was reached, according to Bates.
“They said they intended to leverage the college’s assets,” he said. “They believed the college has assets that they could sell.”
The university negotiating team members also said they were considering requesting that the Ohio Attorney General allow the university to use the college’s endowment fund of about $22 million should the college fail, he said.
Not on eBay after all
On Saturday, March 29, the university trustees released a second statement, calling on all parties to help resolve the negotiations.
“Recognizing that every day of delay is a day lost towards reaching the goal sought in common by all parties, the Board is prepared and willing to negotiate at any time with any party to the end of assuring a vigorous, progressive residential liberal arts college while at the same time protecting the viability and vitality of the University,” the press release stated.
However, the press release apparently contributed to confusion about the college’s fate that led to a Dayton Daily News front page article on March 30 that implied the college was for sale to anyone with $12.2 million, information that was conveyed to a national audience in a small New York Times article on April 1.
“That remark was taken out of context. It was very misleading,” Sirk said this week.
“The intent of the board’s release on Saturday was to offer support to the ACCC to make this deal happen,” Sirk said.
Apparently, the Tuesday posting on eBay of Antioch College for sale for $12.2 million was an April Fool’s Day prank.
The evidenciary hearing that had been scheduled for April 1 in the lawsuit brought by college faculty against Antioch University was postponed, according to Greene County Common Pleas Court officials.
The confusion of the past week’s actions contributed to that postponement, according to faculty member Peter Townsend, one of the faculty who filed the suit. The suit charges the trustees with mismanaging the college’s finances and choosing to close the college when less drastic means were available for addressing its financial problems.
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