Monday, July 12, 2004

Lincoln Completes Sale of $40.1 Million in Revenue Bonds to Finance Construction of 400-Bed Residence Hall and Refinance Graduate Center
Moody's Investors Service has assigned Lincoln its first ever "A3 underlying rating" to the sale of the bonds, calling the University's financial outlook stable and acknowledging Lincoln's "distinctive market position" in higher education.

Lincoln University, PA —Lincoln University, which is celebrating its 150th anniversary as America's first Historically Black University, has achieved a new milestone after completing the sale of $40.1 million in revenue bonds to finance two of the University's major projects.

Lincoln's revenue bond sale on June 10, 2004 financed the construction of a 400-bed residence hall in two phases at the University's main campus in southern Chester County, PA. In addition, the sale of the revenue bonds has refinanced all existing loans including the purchase of the University's Graduate Center at 3020 Market Street, in Center City Philadelphia, as well as important refurbishments on the main campus.

For the first time in the University's 150-year history, Lincoln earned an investment grade rating of A3 from Moody’s, which assessed the University's financial outlook as stable. This rating enables the University to sell bonds in the capital markets using the same method that more well capitalized higher education institutions do. Moody's based its rating of Lincoln on several key points:
  • Lincoln has a distinctive market position as a state-related Historically Black University, with significant demand for its educational programs by students outside of Pennsylvania;
  • Lincoln has experienced an increase in student applications and is selective in its admissions, accepting only 44% of applying students for fall 2003 enrollment;
  • Lincoln has favorable operating results, with moderate reliance on state funding; and
  • Lincoln has modest financial resources providing adequate bondholder security, with limited additional borrowing plans.

The A3 rating is especially significant because many colleges and universities are unable to qualify for an investment grade rating. Moreover, Moody's rating is based on the company's thorough assessment of Lincoln's financial performance, the leadership of University President Ivory V. Nelson, Ph.D., and his management team, as well as Lincoln's track record in achieving its educational and financial goals.

"This is an historic occasion for Lincoln University and underscores the fact that as Lincoln celebrates its past and current accomplishments and distinctions in higher education, Lincoln's best years of achievements are still ahead," President Nelson said.

President Nelson added: "The new residence hall fits into Lincoln's strategic plan for expanding its student enrollment. Also, the University has successfully refinanced its Center for Graduate Studies and Continuing Education. This removes previous restrictions on leasing space at the Center."

The bonds were issued by the Pennsylvania Economic Development Financing Authority and insured by the Financial Guaranty Insurance Company, of New York, a bond insurer carrying "Aaa" and "AAA" financial strength ratings by Moody's and Standard & Poor's (S&P) Rating Services, respectively.

The construction will cost an estimated $21.2 million. The repayment of the existing loans costs $14.1 million. The rest of the funds will be used for debt service reserve and other required funds, and the costs of issuing the bonds. The University has refinanced approximately $13.2 million in outstanding principal from two loans made by the Educational Direct Loan Mortgage Corporation. The original loans were used for various capital improvement projects on the main campus, including renovations and maintenance to three dormitories and an administrative building that houses the University's Department for Public Safety.

The Series 2004 Revenue Bonds were issued in two parts: $30.2 million in 2004A Tax Exempt Revenue Bonds, and $9.9 million in 2004B Taxable Revenue Bonds for the refinancing of loans for Lincoln's Graduate Center. The six-story, 193,000 gross square feet building houses Lincoln's six master's degree programs in administration, education, human services, mathematics, reading, and school administration. The building also provides continuing educational opportunities for the Delaware Valley region and is utilized by a charter school and other commercial tenants.

Lincoln's 400-bed dormitory will be built in two phases, each to consist of 200 beds. The first phase completion is expected by August 2005. The second completion is expected by August 2006. Official groundbreaking for the new residence hall will coincide with the University's first meeting of the Board of Trustees of the 2004-05 academic year on September 18, 2004. The time of the groundbreaking ceremony will be announced at a later date. Construction bids were opened on June 9, 2004. However, construction of the road has already started for the dormitory that will be located at the rear of Lincoln's 350-acre main campus.

Founded in 1854, Lincoln University is nationally recognized today as a major producer of African Americans with undergraduate degrees in the physical sciences (biology, chemistry and physics); computer and informational sciences; biological and life sciences. Lincoln enrolled 2,000 undergraduate and graduate students for the 2003-2004 academic year. The University starts its 2004-2005 academic year on August 25, 2004.

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