Pre-Hatch Chicken Count Leads to Egg-on-Face at Centre College

The A. Eugene Brockman Charitable Trust this week reneged on a $250 million donation in stock to Centre College hours before the deal closed. It would've more than doubled the small school's endowment. Before the floor fell out, Centre had planned to create 160 full economics, business and science scholarships with the money.

Here is what happened: Bob Brockman is a former student at Centre and an entrepreneur whose companies share a close affiliation with the Brockman Trust. Brockman had in 2006 engineered a merger between two companies. One of them provides support to auto dealers and is called Reynolds and Reynolds. It holds several billion dollars in debt.

Brockman's organization guaranteed Centre the $250 million on the expectation that the trust would receive a large shareholder payout after Reynolds, the indebted company, secured the loans it needed to refinance and ideally pull itself out of debt. The market for these loans has been strong recently and it seemed reasonable to believe Reynolds would finder a lender.

Moody's unfortunately failed see to how shareholder payouts would improve company productivity. Rather, in their perspective, the plan wasn't likely to do anything other than drive Reynolds further into debt. Moody's downgraded Reynolds’ credit status before anyone lent them the money; the plan to refinance never came to fruition and thus began the third act. Brockman's Trust, the indebted company's primary shareholder, never saw the payout; Centre College couldn't receive a gift of money that didn't exist; the diver never jumped into the bucket; the trap never fell on the mouse.

The college did not meanwhile seem aware of the operation’s contingent nature and had promoted the gift as a basically sure thing for several months.

Let’s for the sake of argument assume Brockman stays with university philanthropy after this unfortunate incident. Centre is the Brockman Trust's primary benefactor. The college has in the past received a total of around $15 million from the philanthropy.

Other than Centre, Brockman also supports Texas-based research university science and medicine. Rice received $11 million from his trust in 2009 to build a physics lab; another $50,000 went to Rice's music school the following year. University of Texas has also received $50,000 from Brockman for cancer research and a smaller sum for medical education.