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Bushnell Eyes Debt-free Future

By Greg Bordonaro

April 02, 2012

The Bushnell has set a financial goal of being debt free within 10 years. And Michael Fresher, The Bushnell's chief financial officer, said it's a realistic target.

Right now the performing arts center has $12.8 million in debt, which was recently refinanced through a private placement deal with RBS Citizens. The Connecticut Health and Educational Facilities Authority helped with the deal.

The Bushnell originally took on that debt in 1999 to help finance the construction of the 907-seat Belding Theater, which opened in 2001, just six weeks after the Sept. 11 terrorist attacks. The financing package at the time included a $5 million bridge loan and $15 million in bonds.

The bridge loan was fully paid back last year, Fresher said, and The Bushnell has paid off almost $3 million in bonds.

With interest rates hovering near historic lows, Fresher said management had been looking to refinance the remaining debt. Two years ago The Bushnell went to the market and got a bond rating for the first time from Standard & Poor's.

But lenders weren't initially impressed, Fresher said, and there was limited interest from financial institutions to do a deal.

"Nobody bit in the beginning," Fresher said. "There were institutions that thought we weren't big enough and didn't have enough cash."

Then RBS Citizens stepped forward. The 10-year, $12.8 bond package has an interest rate of 3.37 percent. It's refinancing a 30-year bond that had a 5.25 percent interest rate increasing to 5.75 percent through the maturity term. That will save The Bushnell about $370,000 a year, Fresher said.

As part of the new financing package, a mortgage has been placed on the Belding Theater, Fresher added.

That savings will help The Bushnell begin to rebuild its endowment, which took a hit over the last decade, topping off at $20 million in 2007, and then falling to its current $12 million mark. Fresher said The Bushnell uses its endowment to fund debt service. They also draw down on about 4 percent of the endowment annually to cover operating costs.

Fresher said the plan is to pay off the debt completely in 10 years. Considering The Bushnell has been able to pay off $8 million in debt over the past 10 years in precarious economic conditions, Fresher said the goal is obtainable. But it will be predicated in part on future economic conditions and successfully implementing the nonprofit's growth strategy.