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GTS and M&T Close on Loan
General Seminary Closes On $5.3 Million Loan with M&T Bank
Short Term Loan Provides Working Capital for Upcoming School Year
New York City – Today, August 9, representatives from the General Theological Seminary (GTS) and those from its chief lending institution, Manufacturers and Traders Trust Company (M&T Bank) signed documents finalizing a $5.3 million short term loan which will provide working capital for the upcoming school year, GTS Interim President Lang Lowrey announced. The Seminary will be able to draw on the funds immediately. The agreement stipulates that the loan will be repaid from the proceeds from the sale of four residential units in the building known as Chelsea 2,3,4 which was authorized by the Seminary’s Board of Trustees in May, 2010. The sale of the units is also expected to reduce the overall GTS debt by up to $3.9 million.
The loan agreement also includes several covenants with which the Seminary must comply in order to avoid default. These covenants include a revenue covenant tied to Fall 2010 tuition expectations, a minimum debt service coverage ratio covenant and various other financial and operating covenants.
“Clearly the greatest challenge in meeting the terms of the loan will be selling the four residential units within the one year window stipulated by the loan,” Lowrey said. “In addition to the time and regulatory complexities of converting the units to condominiums, some construction work will be required and numerous approvals must be received from both city and state governments,” Lowrey added.
President Lowrey explained the loan will give up to a year breathing room for GTS to address its larger financial difficulties. Chief among these is the need to reduce the Seminary’s significant amount of debt and to develop a business model that is sustainable. The Seminary’s President also thanked GTS trustee Sandra Johnson, Executive Vice President Maureen Burnley, Associate Vice President Frank DiMaiuta and several GTS donors for making the loan a reality. “Much remains to be done in the area of General’s finances,” he said. “But today’s loan closing is a critical first step in the task of addressing the more long term concerns.”
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Executive Director of Communications
The General Theological Seminary
175 Ninth Avenue - New York, NY 10011
(212) 243-5150 x285